The days of sharp-suited financial advisers are numbered as consumers move towards taking robo-advice online.
Robo-advisers can do more or less the same job, but without the human touch and the expensive fees that go with it.
Now, anyone can find financial advice 24/7 as long as they have an internet connection, cash to invest and a smartphone or other gadget to access the web.
What is robo-advice?
Forget that vision of lines of robots sitting at desks number crunching with computers. Robo-advice is the fintech term for clever software that matches investments to consumer data keyed in from online forms.
The technology analyses the answers consumers input about their finances to build a risk profile and then asks ‘if this, then the answer is that’ and moves along the programming until a match is found or returns a no result.
The computer then calls up a list of products and services from a database that are coded as suitable for that profile.
Why are human advisers going the same job more expensive?
The human advisers needs an office, equipment, technology and other resources that cost money. Without the overheads, advice firms can do the same job at a lower cost, even when a profit margin is added.
Robo-advice effectively allows financial providers to offer their products direct to consumers by cutting out the middle men and reduces costs at the same time.
Is robo-advice good for everyone?
Anyone can access robo-advice. Survey after survey from financial firms highlights that too few consumers take professional advice about their money and investments, which could leave them at a disadvantage with savings shortfalls in later life.
Can robo-advice be trusted?
That depends on the consumer. Technology can make mistakes the same as human advisers. Software can only work with the parameters developers have written into the code, so thinking out of the box is unlikely.
The bottom line is human financial advisers number crunch consumer data on computers anyway, so robo-advice merely replaces the data fact find to some extent.
The recommendations that come out of the robo-advice process should be similar to those suggested by a human adviser.
Some would argue robo-advisers are less likely to make mistakes, but if a consumer keys the wrong information the ‘rubbish in, rubbish out’ rules applies.