Susan Edmunds at Goodreturns quotes David Boyle, Group Manager of investor education at the Commission for Financial Capability
“…roboadvice was a potential starting point for people who did not know how to engage with financial advice, and who were not ready for a personalised advice service from an adviser”
This reminds us to offer a helpful set of definitions to advisers seeking to add some form of robo-advice to their offer over the coming year.
- You can offer Robo – “near advice” essentially you can fully automate a buying process which includes lots of good information but without giving any any advice, or maybe just giving what is currently class advice.
- You can offer “Near-robo” advice. This means using lots of online tools to help a client qualify themselves to enter the personalised advice process, but which is completed by a human.
Advisers should be investing heavily in the development and provision of the latter kind of service. The only service which should require special regulation is true robo-advice – where personalised financial advice is completed entirely without a human reviewing it. This kind of process is going to be expensive, and for many market segments in New Zealand it will simply not be economic. Having said that, the key issues will be:
- Clarity of the advice process – does the client know what is going on?
- Scope of the advice process – it will probably need to be limited, can you safely limit it and ensure the client understand that?
- Literacy – asking questions online is all very well, but you may miss out on cues which tell you that the client doesn’t really understand the question. So literacy cues and tests are going to be crucial
- Extensive swim-laning – so you can help clients that need a service different to the full online process.