The Great Robo Misnomer

Robo has been the misused buzz word in Wealth Management for several years now. It started with a few online offerings which entered the investment management space as digitised D2C providers and has evolved to be, well quite frankly, not a great deal more than that.

Arguably some early pioneers did have a genuine 'robotic USP'. Businesses such as Betterment, Wealthfront, Likefolio, and Nutmeg (who as irony would have it are keen to shirk the robo label), and others, have foraged a comfortable but unthreatening position to call their own. They continue to play in various areas of the value chain and have captured elements of a small and slightly amorphous segment of the market.

They capitalised on the coming of age of the digital savvy generation in a post RDR world, where the rising costs of traditional advice models and the availability of cheap tech combined to present them with an opportunity to create some jazzy user interfaces and they began to stir up the ‘robo misnomer'.

But in the time since, what have the incumbents been doing about it and do they care about this little threat?

Every industry conference, every management offsite and every investment publication in the past 24 months has likely featured a robo agenda item of sorts, but the response to all the talk has so far been massively underwhelming.

Don’t get me wrong – the industry’s mainstays have all progressed on plenty of digital frontiers, but seemingly all a traditional WM has to do to create 'robo' headlines in the business broadsheets is to digitise an application form for one of its mutual funds.

Whilst even that’s been a stretch for some, for the most part they've launched/tidied up their web portals and reporting, attempted to go mobile, and they're placing more weight on virtual customer experience… which are extremely positive outcomes for their existing clients. But is there something human-less out there that can actually advise those of us without an existing Wealth Manager or Advisor to invest, how to invest, or even just if it's appropriate to do so?

It’s hardly surprising that a large number of organisations including wealth arms of some high street banks are pressing pause on any forays down the robo path for fear of the repercussions. Only recently the FCA claimed the distinction between advice and guidance has become increasingly grey with the advent of platforms and robots, and cases are beginning to emerge of developers being held culpable for the actions of their algorithms. All this might well put the wind up those already reeling from the regulators lashings around suitability and appropriateness, and with MiFID II looming, who could blame them.

Despite this, 2017 promises to be the year some of the veteran names in the wealth management world unveil their takes on robo, as the risk of not having skin in the game becomes too unbearable.

UBS's SmartWealth has recently opened its books and delivers an impressive fully automated advisory process, and Investec's Click&Invest, and Killick & Co's Silo are also set to come online in the next few months. Combine this with another slew of Fintechs hitting the web, Munnypot and Wealthify to name a couple, and perhaps things are looking up - some have even been in cahoots with The Advice Unit, part of the FCA’s Project Innovate!

It’s hard to know which horse to back really, but if you attempt to break it all down the main concern in an age that advocates simplicity, transparency and fairness for the consumer, is whether innovation under the ‘robo banner’ is truly innovative at all or just a kaleidoscope of infographics masking the same old thing!