Introducing the Space Money Talks Robo-Advice round table

Introducing the Space Money Talks Robo-Advice round table

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www.space01.co.uk/money-talks

Participants : Phil Brown head of retirement propositions at LV=, Billy Burrows director Retirement Intelligence, Adam Byford, managing director, Synaptic Software, Marilyn Cole, managing partner Space, Keith Churchouse, director of Chapters Financial and SaidSo.co.uk, Chris Daems, director Cervello Financial Planning and AE in a box, Malcolm Hurlston, chairman Financial Inclusion Centre, Michael Ward, managing director of comparison site Payingtoomuch.com

Chair: Financial journalist John Lappin

Viewpoint: Marilyn Cole

Is it really the dawn of the machines when it comes to advice? Certainly the robots have been hogging the headlines in the trade press for many months now and even the Bank of England has got in the act.

Speaking to the TUC last November, BoE chief economist Andy Haldane said: “The smarter machines become, the greater the likelihood that the space remaining for uniquely-human skills could shrink further. Machines are already undertaking tasks which were unthinkable – if not unimaginable – a decade ago. The driverless car was science fiction no more than a decade ago. Today, it is scientific fact. Algorithms are rapidly learning not just to process and problem-solve, but to perceive and even emote,” he said.

So do we face the prospect of the robo-adviser not only replacing the human adviser but maybe telling him or her, it’s sorry for all their troubles?

Actually Mr Haldane rated occupations in three groups in terms of vulnerability to being mechanised. He didn’t mention IFAs specifically, though perhaps surprisingly accountants were in the most vulnerable group and hairdressers among the least.

Our view at Space is that advisers should not be complacent but that predictions of their demise are premature. In fact, it is just as easy to envisage a significant boost in adviser productivity. In fact, it has already started.

There has already been a back office revolution, but what may have been underappreciated is the parallel revolution in client, IFA and provider relationships.

Cast your mind back and consider that say 15 years ago, advisers often struggled to get accurate performance data or retained huge amounts of portfolio information on their systems which is now shared with clients sometimes in real time and of course much is shared online.

Building on this sort of ‘mechanisation’, adapted forms of Robo-Advice could see advisers able to increase their reach across the market and down the income scale.

Indeed, we believe you can only go far in this debate before you have to ask advisers where they stand, and indeed what they see as the practical applications. That is why we plan to turn our discussion into a report to distribute to our clients and contacts across the industry to provoke further discussion.

We will also be asking advisers and our experts just how effective more mechanised processes may be in terms of servicing clients with smaller pots. Crack that and the current advice sector may have something significant to offer to the FAMR review.

Of course advisers do not operate in isolation. There have been massive changes in how providers interact with customers, the rise of comparison sites, (with one represented in the debate) and many challenger brands in wealth management, protection, employee benefits and banking all of which have put technology at the heart of their offers.

But when it comes to Robo-Advice, is probably fair to say that most of the debate to date has been focused on pensions and investments and particularly on helping people make the correct decisions about their pension income given the Freedom and Choice reforms. In other words, protection has been a little overlooked; likewise applications that could revolutionise advice in the workplace. There is clear political pressure to ‘do something’ first about people coming up to retirement but we will be asking our panellists where they think Robo-Advice and partial Robo-Advice can be applied to best effect.

Of course, in financial services, we know that when we discuss robots, we are really discussing automation of processes across computers, tablets and smart phones rather than, for example, Honda’s walking, talking robot Asimo.

In financial services terms, a robot – as opposed to a part human part computer ‘cyborg’ – would see a machine take over the whole process of customer interaction including the sale/purchase.

At all times, there has been a risk of disintermediation – ask a high street general insurance broker if you can find one – a process often carelessly described as cutting out the middle man though sometimes it also meant the loss of a valuable ally in dealings with big institutions.

Yet it is our view is that the intermediated market will remain very important though it needs to adapt as other big providers adapt as well.

So when you ask us at Space – a consultancy that helps build the technology and the customer interfaces for both direct and IFA-focussed business – whether the robots will be taking over – we think not.

Now it’s time to ask advisers for their views on the threat, but probably more importantly how they plan to see off the threat and turn it into an opportunity.

We will be posting our initial thoughts, web cast interviews and a final report here over the next couple of weeks. All you need to be kept informed and receive a copy is to supply your email address. In the meantime, please watch this Space.

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