Free robo-adviser set to launch

Free robo-adviser set to launch

A free robo-adviser is set to launch to the wider consumer market after gaining regulatory approval from the Financial Conduct Authority. 

Financial planning app Multiply has been given the green light by the regulator after an 18-month testing process in the FCA's regulatory sandbox, with plans to launch its service to the wider market in summer 2019. 

The company, which aims to put "a full personal financial adviser in everyone's pocket, for free", ran 100 live cases building financial plans for customers under the regulator's supervision and has now been approved to provide automated advice. 

Multiply said its algorithms had no human bias and were therefore "hardwired not to mis-sell", with the app's chief executive Vivek Madlani backing the model as a means to tackling the advice gap in the market. 

Mr Madlani said: "At the moment the industry is going backward, the advice gap is widening. People are ready for Multiply; a free digital-first approach.

"We want to put the power of a personal financial adviser in everyone’s pocket to help Brits access the advice they need to do the stuff that really matters to them - buying a home, saving for retirement, starting a family."

He added: "It is extremely encouraging to see the FCA advice unit actively supporting ideas like ours. Their commitment to bringing innovative firms to market that will benefit consumers will see big societal issues like the advice gap tackled, and hopefully solved, sooner rather than later."

Mr Madlani said his was the first company to receive FCA approval to automate the full advice process, something which he was "immensely proud" of. 

The app aims to create a financial plan for customers in 15 minutes, once users have shared their financial situation and goals, including recommendations of provider and product type and how much should be invested into each product.

The service is free to use, with Multiply expecting to make its money from product referral fees and commissions. 

Simon Bussy, director of wealth at Altus Consulting, said: "In an extremely competitive marketplace, this development raises the bar, and moves the story on from the ‘linear-journey-into-an-in-house-portfolio’ investment proposition favoured by some digital wealth services to something broader, just as Pefin has in the United States."

But Mr Bussy said Multiply will still face challenges in creating a consumer-facing brand, which he warned would take time and "significant" money on an ongoing basis, and distributing its product to a "sufficient" number consumers, which he said "even the biggest global brands" struggled with. 

He added: "The challenges they will undoubtedly face are...cost, the conversion rate from ‘interested’ to ‘purchaser’ will need to be significant and the fee income generated from the third party must be higher than the acquisition cost, and advice or guidance, as some consumers will want a quick ‘guided’ journey while others will require personalised advice and potentially will want to talk to an adviser, even if it’s just to validate or reassure.