Lipstick on a pig — the sorry state of “robo-advice”

By HENRY TAPPER

On 11th and 17th of September, those turning up for the FT Adviser Financial Advice Forum in London and Birmingham respectively will be entertained by a panel session.

The conference promised to bring the views of industry and regulatory experts on the latest challenges facing advisers, and how they can be overcome.

I had been invited, and accepted, because I do challenge the advisory community to raise its game.

I’m cross because I was originally on the “interactive panel” and appear to have been dropped (though I have not been informed of this by the FT).

I’m sad because this confirms what I have long suspected, that robo-advice is being treated as nothing more than lipstick on the wealth management pig.

If you look at the three propositions on offer from WealthSimple, MoneyFarm and Holland Hann & Willis, you will find the same core model. A technology front end, with a wealth management back end.

All that technology is being used for is to reduce the cost of acquisition of other people’s money. And the money that is being acquired forms part of the current wealth pool that is all that IFAs seem capable of feeding from.

Disruptors excluded

The FT seem to have excluded me from this cosy threesome because I might just point this out. They are right to do so, though why they ever thought I wouldn’t challenge the robo-advisory lip-stickery I do not know.

Every iteration of the Nutmeg model revolves around funding from a pool of assets attracted by an expensive UX (user experience). But no matter how bright the lipstick, there is still a big fat wealth-management pig sitting behind – ready to chew up the twenty and fifty pound notes.

Meanwhile, the genuine innovators, whose models reach out beyond a replication of Nutmeg, are nowhere to be seen.

AgeWage, who were originally invited, have now been dropped – with no reason given.

Pension Bee – who have produced the first genuine mass-market SIPP – are nowhere to be seen. Open Money are doing much the same.

My FutureNow - which only this week cut an important deal with L&G to be an independent aggregator and Zippen which should follow, are also outside the tent.

And there are many more I could mention, which are currently in incubation.

Financial advisers - cover your ears

Robo-advisers are not embracing new technologies to extend the scope of their advice; they are doing so to become more competitive in the existing wealth pool.

Meanwhile for the 94% of us who are not paying for advice, these new players are an irrelevance.

Organisations like the four mentioned above, who are looking to reach out to the millions of savers who do not currently have access to the support they need to make complicated decisions, are excluded.

I can only conclude that the tent is closed to all but the regulated advisers and that includes the 94% of us who are no closer to getting advice than we were “pre-Nutmeg”.

Financial advisers – cover your ears – you don’t really matter to most of the UK population and that isn’t going to change so long as you zip up your tent.

Opening up the tent

Eventually, the FCA, MAPS and tPR will find a way to broaden the scope of advice beyond those with the wealth to pay for it.

But that day is some way off, and the innovators have been excluded from the FT Financial Advice Forum.

But it is only a matter of time before the tent is opened up. I will keep up the pressure, and so will those who genuinely want open pensions and open dashboards, providing ordinary people with the information they need to take important decisions.

HENRY TAPPER is the CEO of AgeWage Ltd.