‘Retirement advice for the masses’ Wealth Wizards brings robo advice to pensions
A recent report by GlobalData Financial Services said robo advice that can provide personalised recommendations in high volume at low cost will improve access to retirement planning advice, narrow the advice gap for those with smaller pots and help individuals make the most of new pension freedoms.
Now, Leamington Spa based Wealth Wizards, has launched a ‘robo-paraplanner’, introducing the concept of robo advice to the UK pensions market.
Wealth Wizards is a digital financial planning advice provider – essentially an online IFA – and claims it produces results as secure as, and more consistent than, face-to-face advice.
The company partners with employers to offer their staff pensions and retirement advice, as well as general financial planning services, as an employee benefit; it aims to make financial advice affordable and accessible to all.
Wealth Wizards offers fully regulated advice via an online app and its platform is also offered as a white-label solution to other financial services providers.
The company offers robo advice in two main areas – instant personalized advice for employees building up their workplace pension, and advice for those approaching retirement and wanting to explore their options.
Wealth Wizards’ tool uses a hybrid of human and digital to provide start-to-finish retirement advice in less than two hours, an experienced person undertakes a client fact-find – either over the phone, online or face-to-face; the output is a regulated advice solution made up of an annuity, a drawdown, or a blend of the two.
Chief executive Andrew Firth said: ‘It’s the first of its kind in the world looking at retirement and helping people annuitise, stay flexible or blend the two. It is a pretty sophisticated tool in that sense and a good deal more sophisticated than ISA advice. It is definitely unique.’
‘it is not only as secure as face-to-face advice, it is probably more consistent’
When making its recommendations, the tool takes into account all of a clients’ income streams. It can be integrated with advisers’ existing business models as well as their ‘house views’.
Firth continued: ‘We’re reaching a point where we can demonstrate it is not only as secure as face-to-face advice but probably more consistent.
‘The audit trail it offers is certainly very difficult for an actual adviser to produce, so what you’re getting is something that is as good as face-to-face advice but with more consistency, a lot more robustness and which can be delivered at a lower price.’
Pension freedoms introduced in 2015 have given individuals greater choice and flexibility in how they take their pensions, and there has been increased demand for high volume, low-cost robo advice
By providing advice as an employee benefit, Wealth Wizards aims to improve access to, and engagement with this advice; the employer benefits from reduced advice costs and, for those looking to provide additional value for their employees, it will also put them at a competitive advantage.
‘Wealth Wizards has created retirement advice for the masses’
LV= has already started using Wealth Wizards’ white-label solution, where director of advice strategy David Stevens said it can take up to five hours out of the advice process.
He added: ‘We have confidence in the quality and breadth of the solutions the engine is providing at volume. We will have potentially hundreds of customers a week going through the engine.
‘Through the use of advanced algorithmic innovation and expert financial planners, Wealth Wizards has created retirement advice for the masses, which has the potential to create huge shifts in both the cost dynamics of the industry and the volume of people receiving advice.’
Wealth Wizards’ advice-based proposition differs from the other digital solutions in the pensions arena such as Aviva’s ‘Shape my Future’ tool, or the government’s own pension dashboard, which are primarily being used to encourage individuals to save for retirement.
Using technology to provide advice at retirement is less common, primarily because retirement planning is such a complex area; the amount of information required to be able to give advice is huge.
Robo advisers will need to be able to accommodate very large volumes of data, and equally importantly provide an audit trail to show how information has been interpreted, what risk and appropriateness considerations have been made and evidence that its recommendations have been clearly communicated and understood by the client.
The move into pensions is a further development for robo advice; as well as shaking up wealth and investment management we recently learned of the £2m cash raise by MortgageGym (Research Identifies Huge Potential for Robo Advice: MortgageGym Limbers up), and there is active development in other intermediated channels such as insurance.