The government and FCA are currently consulting on how to extend advice and other forms of support to a broader audience as part of the Financial Advice Market Review.
At present, the majority (63%) of advisers say they would trust the outcome of an online questionnaire that examined answers to questions regarding attitude to investment risk and investment goals and then used an algorithm to recommend investment options. However this confidence is not yet mirrored by UK consumers.
Just 24% of UK consumers currently say they trust financial advice from digital sources. This figure falls as people get closer to retirement age and are more likely to seek advice in person. Just 15% of those aged 55 and over said they would trust advice based on an online questionnaire.
Advisers also reported that robo-advice is poorly defined, with nearly three quarters (73%) unsure of what truly constitutes robo-advice.
Steven Cameron, Regulatory Strategy Director at Aegon commented:
“Technology has positively disrupted many business models but when it comes to financial services, there are still a number of challenges to overcome. People need reassurance when it comes to major financial decisions and most will welcome having the option of some human support such as a call at the very least to ensure they’ve understood their options. On this basis it’s not surprising many people said they were sceptical about digital advice, and may not be attracted to an online only model.
“Current terminology doesn’t help matters. Robo-advice may have an offputting dehumanized ring to it, whereas digital apps are a welcome part of today’s world. Customers may be more open if we talk in ‘money app’ terms. Financial advisers say they are unclear what constitutes robo-advice, and as part of the Financial Advice Market Review, we’d like to see the regulator set out very clear definitions in customer language of what constitutes advice as well as guidance and where digital support sits within this.”
