Noise needn’t be a nuisance

Noise in advice is, to a certain extent, inevitable, because it comes from the same source that the best aspects of advice come from – the personal, idiosyncratic, human nature of the adviser-client relationship. It cannot be turned off, but it can be turned down.

The most effective noise-cancelling remedy, whatever its source, is to employ algorithms and sound processes where there are decisions to be made. By rigorously following a set of predefined rules for first selecting and then communicating about investments to an individual, advice can be made much more consistent.

This emphatically does not mean the end of the human adviser — clients place immense value on their relationships and trust — especially the type that expertly cuts through noise. This is an invaluable commodity that no robot can replace.

Greg B Davies is head of behavioural finance at Oxford Risk