HM Treasury and the FCA thought robo-advice was going to be the answer to the nation’s prayers.
Back in 2016 rather than recommend a long stop or look at other ways to encourage more flesh and blood advisers to enter the industry, HM Treasury and the FCA's Financial Advice Market Review identified automated advice as the way to solve the advice gap.
The FCA created a dedicated Advice Unit to support firms developing automated advice models.
Despite the FCA offering this assistance now the regulator has found several causes for concern in the robo-advice that is being given to clients.
The watchdog revealed some robo-advice firms were failing to properly disclose prices and services, and crucially, the regulator flagged risks clients were not receiving suitable advice.
As a result, the FCA has required many of the robo-advisers which took part in the study to make "significant changes" to their businesses.
Figures behind the burgeoning robo-advice services were swift to defend the sector as "still evolving".
Next time the human financial adviser market comes under fire, I recommend you simply shrug your shoulders and say you are still evolving too. See where that gets you with the regulator and your clients.
Before I am accused of being anti-automated advice, let me make it clear I accept that there is a place for machines.
Robo-advice is a great way – but as the FCA’s study shows no more perfect than the human way – of starting a savings journey or dealing with basic financial needs.
But the advantages of human advisers over their robo counterparts are immense and include sensitivity to emotions, flexibility, accountability and the ability to offer tailored services.
As Anthony Morrow, chief executive of Evestor, states about today’s robo-advisers: "This is a fast moving space and it is certainly unlikely that the winning model is out there at the moment."
When you are sat scared about how you are going to afford your first home, fearful you can’t afford school or university fees, worried what will happen to the roof over your head you don’t need a robo-adviser.
When you need someone to look you in the eye and convince you everything will be alright you need a human financial adviser.
The winning model is out there already and it needs to be recognised by regulators that robo-advisers should assist with getting people to a human adviser rather than replace them.
Regulation needs to get more humans offering financial advice rather than pushing algorithms as the solution to sorting out our monetary woes.