There has been much commented on recently about robo-advice, due to the Financial Conduct Authority's concerns that some robo-advice firms were failing to properly disclose prices and services, and crucially, flagged risks that clients were not receiving suitable advice.
As a result, the FCA has required many of the robo-advisers that took part in the study to make "significant changes" to their businesses.
This is a relatively new market, which few independent financial advisers seem to have rushed into. There still appears to be a big learning curve for those providing the technology and online “advice”.
At one time, there was a fear that robo-advice would replace financial advisers completely.
But, maybe the reason only a few successful direct-to-consumer [D2C] sites have been set up is because the face-to-face proposition is still the most successful way to secure ongoing business and build relationships.
I must confess here and now, that our company did set up a robo-advice site, UNIQinvest, but not because we were afraid of losing out on valuable cost-effective business, but as a cheaper means for the children of our clients to accumulate capital, while still having the advantage of financial planning and occasional reviews from a live planner.
It is a value-added service, but on its own it is pretty meaningless as far as we are concerned.
Maybe some time in the future, as Peet Denny, chief technology officer at Wealth Wizards, commented, “advisers will spend more time on value-add activities in relation to their clients and increasingly less time on portfolio management as the robo-advice solution, driven by AI capabilities, does the heavy lifting”.
The technology is clearly still evolving, but despite this, some of the old chestnuts still abound with online investing.
According to the FCA, some firms did not make it clear whether their service was advised, non-advised, discretionary or non-discretionary.
Others compared their fee levels with their peers in a “potentially misleading way”. For example, they compared a non-advised, non-discretionary service with a discretionary service solely on a cost basis without explaining the differences between the two services.
Sounds familiar? Maybe not so different after all.
Marlene Outrim is managing director of Uniq Family Wealth