Two recent bodies of work appear to indicate that financial advisers have got over their initial reticence concerning automated advice and are now eagerly embracing fintech as a means to improve their operational efficiency and help to deliver a more streamlined and engaging customer proposition.


A report by the Financial Planning Standards Board (FPSB), compiled in consultation with advisers around the world, suggests that attitudes among the financial advice population have changed to the point where advisers now see robo-advice as a tool which could help them: ‘In 2015, financial planners saw automated advice tools as both a threat and an opportunity, in nearly equal numbers.’

‘A year later, financial planners are less concerned about the disruptive potential of fully automated advice, and are talking about fintech more as a complement to their businesses: automated advice and fintech tools enable financial planners and financial advisers to increase practice efficiencies or cost-effectiveness; serve clients who are younger, lower-income and with fewer investable assets; and free financial planners to devote more time to activities that bring added value to clients.’

‘fintech tools enable financial planners and financial advisers to increase practice efficiencies or cost-effectiveness’

Financial advisers felt that using automated advice in their businesses could help them become more efficient and accurate; their challenge could be to explain the value-add that comes from working with a certified financial planner.

The FPSB is a global standards-setting body for financial planning which aims to ensure that: ‘regardless of technological advances in, and automation of, advice models, consumers will continue to have access to financial advice that is in their best interests from humans (or technology) competent to provide that advice in an ethical manner.’

The FPSB study coincides with a report from Cass Business School which says that the drive to automation and the development of robo-advice would have happened regardless of the government’s 2012 Retail Distribution Review (RDR).

Professor Steve Thomas from the leading business school, speaking at a briefing entitled ‘The New Adviser in a Post-RDR World’, said financial services firms would have always had to think harder and smarter about adapting with the technology.

Ola Abdul, chief executive of Fundment, which delivers ‘automated investing for advisers’, spoke in support of Mr Thomas’ view, highlighting the fact the number of financial advisers in the UK had fallen from 200,000 in 1990 to just 25,000 today and that it was important for them to go digital in the post-RDR world.

‘Three years on since the RDR, we need to think seriously about advice propositions’ said Mr Abdul, identifying that each remaining adviser could have 1,000 potential clients ‘if the financial adviser has the sufficient technology that would enable their firm to back up their advice propositions with the necessary scale.’

Fundment recently launched a discretionary fund management proposition and an advisory platform designed to be white-labelled by financial advisers in the belief that wealth management still relies ‘too heavily’ on face to face advice.

‘wealth management still relies ‘too heavily’ on face to face advice’

‘We have not thought enough about using technology within a regulated advice environment. Post-RDR, we need to improve the economics of financial advice’ said Mr Abdul, saying that whilst advisers may be using tools for their own benefit they are not currently being used as a way of engaging the client.

‘Firms should look at how they can use technology to improve all their various interconnected activities – from know your client (KYC) and assessing suitability through to relationship management.’

Fundment delivers an ‘efficient model’ process whereby clients and new prospects can complete many of the KYC and information gathering themselves and underpins everything the adviser does in relation to the processing of investment plans, portfolio construction and execution.

‘All of these things can be put into an easy-to-understand automated architecture. Going digital is more than having a website or using tools. It’s about having a systematic digital structure in place to help you do business, meet and control your clients’ expectations, to be flexible and ready for more industry-defining regulation to come’ said Mr Abdul.

The event also showcased CleverAdviser Technology , which removes ‘human emotion’ from the investment decision-making process, and has created a rules-based investment process that combines pricing logic and computer-based mathematical algorithms to make ‘rational decisions’ about buying, holding, or selling funds.

MD Colum Wilde said: ‘The process can limit losses, running the winners and cutting losses, free from human bias, meaning the IFA can be more focused on the client’.

The service, which can underpin a financial adviser’s wealth management proposition, is designed to deliver ‘a visible, repeatable, profitable process which enables stickability between you and your clients’.  CleverAdviser will be creating funds that are based on this process from March 2017.

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