It will not be long before some artificial intelligence programme is able to plough through your bank statements and other data, see what you are spending your money on, assess your risk levels, and draw up a series of investments for you.
In this era where increasing numbers of investors are going it alone or using very simplistic robo-advice services, any decent independent financial adviser has to find a way to differentiate their abilities.
Being able to offer face-to-face advice, or at the very least a down-the-phone service, to reassure, understand and explain is an almighty weapon.
And transparency will be key. All this came to mind in the great debate that sprung up as Hargreaves Lansdown rejigged its Wealth 150 list in to the Wealth 50.
Hargreaves is not alone in having a recommended fund list, but with 1.1m customers it is by far the most influential. The recommendations have been a source of contention.
Best buy lists are far from perfect, which is why financial advisers should seize on their failings to make sure their service truly has that personal touch.Before the Retail Distribution Review, the debate was over exactly what cut Hargreaves Lansdown was making from funds over the list.
Post-RDR, the argument is whether companies are haggling for discounts that get passed on to consumers in order to win their place on the list. Crucially, does the selection of those who offer discounts come ahead of better performing rivals who do not?
This is where best buy lists are a bone of contention. At some point, a value judgement has to be applied.
The most notable judgements in the Hargreaves Lansdown list were the exclusion of Fundsmith, Jupiter European, Marlborough Special Situations and Liontrust Special Situations.
All are top performers, but failed to offer a discount to Hargreaves Lansdown customers.
Meanwhile, those included were Neil Woodford’s (pictured) Equity Income fund, M&G Investments’ Recovery fund and Invesco’s Tactical Bond fund – all dogs that did offer a discount.
There is no problem with offering a discount as part of a negotiation per se, but Hargreaves Lansdown has to explain the value judgement that got these rotten apples into its barrel of funds at the expense of the other more ripe ones. It does this very poorly.
It is possible the company feels hampered by advice rules that prevent it being more specific for fear of actually giving a recommendation.
Well, if that is the case, then it should not be offering best buys in the first place.
If you come up with a recommended fund list you have to be utterly transparent about your rationale, otherwise you might as well just print fund performance figures from Morningstar and let the customer make up their own mind.
What is more, though I can fully understand the pains of the investment trust industry at being withheld from best buy lists, the problems with liquidity are very real. It is a particularly pertinent issue for Hargreaves Lansdown because of its size.
Recommend an investment trust and it will move the share price – and affect the whole industry and any customer who chooses to invest in it. And that cannot be right.
Best buy lists are far from perfect, which is why financial advisers should seize on their failings to make sure their service truly has that personal touch.
No free banking
Ask someone how they rate as a driver and most will say they are good. Statistically speaking though, this can not be true; some have to be average.
Bank customers are like this. No one ever thinks they are being fleeced by their bank, because they say they do not pay overdraft charges and always move their savings to the best deal.
Research from the Financial Conduct Authority debunks this. It says banks made money from 80 per cent of their customers. You are equally likely to be profitable if you have savings or if you are routinely overdrawn.
It does support one truism though: there is no such thing as free banking.
Crypto cretins
I laughed my socks off at a magazine interview in The Guardian with a man who had “lost $1m on Bitcoin”.
He had not. He had actually made a small profit. But before it crashed, his holding was worth $1m (£777,220) and he was making plans for it to hit $5m. He did not sell because he got greedy. He made the mistake of thinking money he had not cashed in was his.
It just goes to show how little those who bet on this currency understand about serious investing.
James Coney is money editor of the Sunday Times
