Robo-advice refers to the use of technology systems to deliver financial advice.
It’s been a growing buzz-word in the financial services profession in recent years, with a rising expectation that machines will replace man at some distant point in the future.
After all, a computer algorithm isn’t subject to the same human biases, which can result in flawed traditional financial advice.
But robo-adviser solutions have been slow to emerge. Those that exist today are better described as online product sellers than financial advisers or even financial planners.
The future could see this position change, as artificial intelligence and machinelearning improves at an exponential rate.
But until then, there’s a continued role for the human adviser.
New research suggests that robo-advisers should be hiring more human advisers to satisfy the needs of their clients.
The research, carried out by fintech firm Nucoro, found that humans were particularly important when it came to the explanation of fees and charges.
Nucoro spoke to 1,028 UK retail investors as part of their research and found that more than half wanted to talk to a real-life human about the cost of services.
They also found that demand for human interaction was high, at 43%, when it came to discussing investment performance.
Investors also expressed a preference for a human adviser when it came to choosing suitable investment products, defining their investment goals, and understanding the most appropriate tax wrappers.
Despite this preference for a human financial adviser, 53% of those investors surveyed said they would consider using a robo-adviser solution.
Nikolai Hack, chief operating officer and UK managing director of Nucoro, said:
“Robo-advice platforms are a relatively new development in the wealth management sector and are clearly set for strong growth, which in many cases will be driven by younger investors.
“However, robo-advisers clearly need to provide service levels around several issues important to investors, and in some cases, this could mean providing access to human advisers.”
The most likely outcome, as technology continues to develop, is the use of robo-advisers to support the work of human financial planners.
We already make extensive use of technology to complete process-driven tasks and do much of the ‘heavy lifting’ behind our services, allowing the human factor to focus on understanding client goals, behavioural coaching and keeping clients on track to deliver their financial plans.