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25th July 2018
International Adviser

The perfect human


Lester Petch, chief executive, TAM Asset Management

While some advisers still see the future as being digital, many now believe robo-advice offerings are a tool that will benefit their business, rather than replace it. This paradigm shift was highlighted by the FCA in May, which announced it would take a tougher stance on robo-advice.

Technology Research Centre and founder of Digital Wealth Insights, said the FCA review highlighted the fact there would be no soft option for robo-firms.

He said it is widely recognised internationally that the UK has the toughest advice suitability standards in the world. “If you can meet UK standards, your proposition will be reusable anywhere.”

Lester Petch is chief executive of TAM Asset Management, which is currently working on a non-advised digital proposition to provide support where an IFA’s clients either do not need or want to take advice.

“Our non-advised proposition is complementary to advisers and is not in direct competition [with human advisers], unlike the robo-advice sector, which often is,” Petch said.

When it comes to the possibility of robo-advisers replacing humans, Petch said he cannot see a future where this will happen.

“Holistic financial advice will always be required. For instance, inheritance, tax and pension planning will still be the preserve of financial advisers, at least for the next decade.”

Moving forward, Petch expects there to be a “symbiotic relationship”, instead of a conflicting one, between robo-propositions and human advisers. “Advisers using our non-advised digital service is one iteration of that solution,” he said.

Digital first

While Petch sees the future as being holistic, Lisa Caplan, head of financial advice at Nutmeg, said the online investment manager sees it as “digital first”. “There are no signs that investors or the industry plan to take a backward step,” she said.

Nutmeg was launched in 2012 and was the first online wealth manager in the UK. At the end of 2017, the platform had more than £1bn in assets under management for more than 50,000 customers.

Despite the ‘digital first’ stance, Caplan said the company still employs more than 140 people based in London alone.

“We have a team with more than 100 years’ experience in private wealth management, macroeconomics, exchange-traded funds, asset allocation and risk management.

“Customers who want to can call our customer service number and speak to a person, not a robot,” she said.

Since the launch of Nutmeg, Caplan said there are more competitors entering the market as investors adopt technology to manage their investments.

“As well as start-ups, we are also seeing some of the big, traditional players look at how they can adapt their existing model or bolt-on an online capability.”

She said some firms will develop their own proposition, while others may look to acquire a smaller provider.

“We believe there is a role for independent online wealth managers that are truly offering a different service for customers. It’s more than offering traditional wealth management services through a website.

“As a digital-first business, we are purpose built for the change we’re leading in the industry,” Caplan said.

Semantic niggle

Petch and Caplan both dislike the term ‘robo-advice’. Petch prefers the term ‘digital’ as “much has changed since the first phase of robo-advice, which was designed to capture millennial interest”.

“Instead it is pivoted to a hybrid model with firms like Wells Fargo offering unlimited human financial advice to support a robo-proposition,” Petch said.

Caplan does not like the term as she believes it gives clients the sense that robots are managing their money.

She said: “The reality is very different. We use artificial intelligence to automate some of the process and improve efficiency. 

“We have tools and a risk-profiling questionnaire that can help our customers make an investment decision that is right
for them.”

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