Advicefront, the latest entrant to the UK automated advice market, launched this month aiming to bridge the gap between purely automated propositions and face-to-face financial planning.
Jose Supico, founder and chief executive of Advicefront, which is backed by former Bloomsbury principal Jason Butler and FP Advance director Brett Davidson, talks to New Model Adviser® about the role of financial planners in automated advice, suitability issues and the future of robo-advice.
Can robo-advice work without incorporating real life IFAs into the process?
Clients have been unwilling to invest all their money with a robo-adviser. They usually put small amounts in and keep the bulk of their assets with a trustworthy financial adviser. It will be a long time before robos can do all the jobs advisers can. I suspect it will be impossible because only artificial intelligence will be able to do the same value-adding jobs an IFA does.
Will robo-advisers suffer suitability concerns as they become more popular?
I am not a specialist in regulation but it is a fair assumption to make. On the one hand, robo is more efficient as it is easier to create an audit trail. On the other hand, if your compliance assumptions do not match with the regulator’s requirements, you could be putting a lot of clients through this process and end up having problems in future.
With big names like Nutmeg still making a loss, is robo-advice a viable investment?
It is an untapped part of the market. The technology world in general has been focused on the consumer and is just beginning to pay attention to this huge area of financial advice. The tasks that are boring and do not add value will become automated, but that is a good thing for financial advisers.
What will robo-advice look like in 10-15 years’ time?
Machine learning and artificial intelligence will help an IFA do all the boring bits of work, leaving them free to engage with clients on the more personal issues. Goal-based planning will be at the centre of robo-advice, but there are a number of other services such as peer-to-peer lending, account aggregation or even crowdfunding, that will play a role.
My long-term vision is IFAs will compete with large institutions such as banks. Robo can be an aggregator of new financial technologies, allowing advisers to offer an ever better service to their clients than the banks.
Do you have a financial planner?
I do my own financial planning because, although I am not a planner, I work in the industry and have worked in wealth management for a long time. I am not a millionaire, so I do not need much financial planning.
What is in your pension plan?
I have long-term investments in mutual funds and index funds.
2013-present Advicefront, chief executive and co-founder
2010-2012 ASK Portugal, investment manager
2007-2010 Timeless Capital Advisors, managing partner
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