Customer service key to good robo-advice

Customer service key to good robo-advice

Good customer service and offering a simplistic model to clients are key to a robo-adviser succeeding in the marketplace, experts have said. 

The advice industry has not been an easy one for robo offerings to infiltrate and where some have succeeded others have fallen victim to a well-bedded belief that apps cannot replace a human adviser.

In May Investec announced the closure of its Click and Invest robo-advice business after two years of losses, stating the reality of the industry was that appetite for its service had remained low and the market itself was "growing at a much slower rate than expected".

Nearing the end of last year robo-advisers Wealthsimple and Moneybox posted annual losses of £2.3m and £3.1m respectively and Nutmeg saw its losses increase to £12.3m for 2017 with Moneyfarm posting a loss of £13.9m for the same year. 

But David Semmens, head of investment strategy at robo-adviser Wealthify, said there were ways robo-advisers could differentiate themselves to succeed in the market. 

Speaking at the Robo Investing conference in London yesterday (September 10) Mr Semmens said providing good customer service as an online business would ensure clients who want to engage further with their investments are still satisfied. 

He said: "I always come back to Amazon and American Express - they have very strong customer service for online businesses."

Mr Semmens added: "There is a fairly complicated process which goes into making a suitability questionnaire simple and understandable's not necessarily that the customer wants to understand the ins and outs [of switching portfolios].

"But they do want to understand when you're making changes to their portfolio, but they don't necessarily want the nitty gritty bits they just want a few key points and they are generally happy with that. And the people who aren't happy with that will get in touch with you."

Mr Semmens said his experience at Wealthify was most people seemed fairly happy with "taking a backseat" when invested with a robo-adviser. 

Hariton Korizis, co-founder and chief product architect at investment firm Resonancex, said a main factor taken into consideration when comparing a future of hybrid advice models or fully digitalised models would be the cost of services, but he also agreed the quality of service to clients remained the biggest player. 

Mr Korizis said: "Perhaps a main differentiating factor will be pricing for different services. But overall, as other industries have shown, whenever digitalisation happens in processes and services margins will be compressed and the arbiter of success will be quality of service.

"It is customer simplicity and we will see that as well in wealth management with more bespoke solutions." 

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