Robo Advice – A Brave New World?

31.05.2016.

robo advice

There’s been a lot in the news recently about the rise of the robots. Robots are beating humans at board games chess and Go, taking starring roles in films such as Her and Ex Machina and the Science Museum in London has announced a major exhibition for 2017 dedicated to the subject. For the financial services industry the latest buzz phrase is Robo Advice. Robo Advice might not yet be a term you are familiar with, but here at Meyado we are sure you soon will be. In the US the technology is much more widespread but it is fast approaching the UK and is likely to become something which touches all our financial planning in the future. So what is it?

This is the definition from Wikipedia: “Robo-advisors are a class of financial adviser that provides portfolio management online with minimal human intervention. While their exact recommended portfolio allocations may vary, currently all robo-advisors employ algorithms such as Modern portfolio theory that originally served the traditional advisory community, which has used algorithmically-based automated investment solutions to conduct portfolio management since at least 2005.”  Or in other words, you put in your information such as age, risk-attitude, investment goals and a “robot” will tell you what investments to make.  Of course the technology behind the advice is cutting edge and advice will be carefully nuanced to your personal circumstances.

If this all sounds a bit too much like I, Robot just think about how technology has already changed our lives.  We go online to book our holidays, keep in touch with our family away from home, collate our groups of friends, study under eminent scholars from international universities – even to pick out a bespoke takeaway to accompany our bespoke Saturday night film or TV selection.

At Meyado Wealth Management we are looking at how this might help meet a gap in the market where often those consumers who have less than £100k to invest find it difficult to get anything more than the most general advice.

CEO of Meyado, Martin Young believes that that Robo Advice is a good addition to the current array of possibilities open to UK and European Consumers and that if complemented with professional advice provided by human advisers this could be a very effective way to expand the business volume that we are able to provide professional advice on.  An example might be that Robo Advice might provide base level advice up to a certain sum of investment but beyond that sum an adviser could be available online to complement the advice available and provide a human interface and somebody to talk through the options.

Of course, as this is new technology there are concerns about its competence and some worries expressed in the press about the capabilities of the algorithms to give the best advice.  Because of this the financial regulators are keeping a very close eye on the matter and improvements to the technology happening  daily. Whilst we at Meyado plan to move carefully on these developments, we very much want to embrace technology in order to provide more services to our customers in the future.  Some clients will still prefer to meet their adviser face-to-face but certainly for Millennials the online world is wholly integrated into their everyday life.

So you may not have heard of Robo Advice yet, but at Meyado we’re sure you soon will.

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