But for people with fairly basic financial needs, Hopkins says automated advice appears to be a good value option. “What will be interesting to see is if technology is developed that provides services to those who have more complex financial needs,” she adds.
“Intangibles, such as trust and empathy, are difficult to replicate via an automated system. Tech that flags up issues to the advice team, alerting them to step in is essential, particularly because advice firms are on the hook for any advice they give, automated or not.”
Turner agrees: “Automated advice may well be the future of advice where Isa top-ups for a digitally savvy individual are concerned. But the same individual may benefit from lengthy personal conversations around inheritance planning. Having a proposition that appropriately flexes to meet customer demands will put advisers in good stead.
“From the research we’ve seen, customers largely respond well to digital advice where it is evident that the process has a human underpin. Well-designed automated advice journeys identify natural exit and re-entry points in the journey to ensure customers feel supported.
“We often see automated recommendations validated and then explained to a customer by the adviser. This works well, as it allows for a customer to confirm their understanding and ask any questions about the process, while allowing the adviser to enjoy the administrative efficiency that the automated advice process affords them.”
Bruce Ely-Johnston, chief commercial officer at AdviceBridge, a platform provider, concurs: “There’s no escaping the value of having a human to instil confidence and trust when making difficult and often complicated decisions, but this is all about giving consumers choice as to how they want to receive that advice.”
How businesses are automating advice
One of the “most exciting” outcomes from the development of automated advice is that it can extend the benefits of high-quality advice to new audiences, says Simon Gray, managing director at Hub Financial Solutions.
“It offers a way to make it accessible from mainly the wealthy into the mass market of ‘middle Britain’ clients. In an age of policy measures such as pension freedoms, where the environment is more complex and people are taking on more risk and responsibility for themselves, it is really valuable to be able to offer cost-effective professional support to a wide range of people.”
Last year the advice business launched Destination Retirement, an automated retirement advice service, providing ongoing advice at “modest” cost to those who otherwise would not seek professional help.
Savers input their retirement goals and models run repeated cash flow calculations across a range of asset strategies to deliver the best financial plan.
“It also recognises that clients at some point will want the option of engaging with a human when they feel they need it, perhaps because they have a tricky question, want something explained or just need reassurance,” says Gray.
