Robo-copped: the problem with robo-advisers

In the last few years, as technology has made great strides in the financial sector, robots as financial advisers is not just a far-fetched future idea. Robo-advisers are actually here. At Unividual, we like to keep an eye on the horizon and we’ve been watching the development of this in our sector with interest.

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Are we all out of a job because robo-advisers can do our jobs better than we can? Well, we are bound to say it, but no, and no. We’re still here, and we definitely do a better job than machines.  The kind of people who take an interest in robo-advisers aren’t daft. Tech, and the burgeoning fintech market in particular, is fascinating. It is potentially revolutionary and can be a great source of low-cost, high-convenience services. We’re not opposed to technology in finance. In our business it is absolutely necessary to make the most of the latest, most accurate and useful technology to improve service to clients, efficiency and improve safety but are robo-advisers a step too far for lifelong financial advice?

We know our clients really well. We understand, check, challenge and meticulously record their preferences. We have a deep and holistic understanding of every individual’s appetite for risk, their life and lifestyle, and we use all of this deep insight when we help guide them towards options that would suit them. Unividual understands that people’s circumstances and aspirations change over time. A human adviser, with this kind of depth of experience and personal relationship, would discount or include plenty of options that an automatic service might choose.

Robo-advisers, as you would expect, have been developed to plan and advise clients without human intervention. This is a great idea in principle, it works superbly in many areas, but for lifelong financial advice it is too risky. The Financial Conduct Authority, the body that regulates the financial markets, conducted a thorough review of the leading ‘automated investment services’ and their findings sparked concerns that robo-advisory services:

  • did not do enough fact finding
  • assumed too much knowledge of their clients
  • didn’t have enough checks in place to make sure people understood what they were investing
  • that the information they had about their clients’ complete financial situations wasn’t sufficient to be able to advise them well enough

The US regulator has already fined automated money-management platforms Hedgeable and Wealthfront.

When you have been around the block enough times, you can spot the latest craze in finance that is going to crash and burn a mile off. Unividual have been supporting our clients across their entire lifetime and all their areas of finance for twenty years. We know where a new technological tool has been applied in the wrong places and the wrong way.

Despite the difficulties to date, some firms continue to develop robo-advisers for new areas, such as mortgages. We’ll keep up to date on the latest plans, but we think these kinds of lifetime financial decisions still need the human touch. We like to get to know our clients and our name reflects our belief that each of our clients is unique and individual. We know it is much better than one-size-fits-all advice, or relying on a robot.

Date of article: 7th June 2019

Author: Cherie-Anne Baxter

Useful Links: FCA report findings

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