Face-to-face advice on financial matters could be replaced by “robo-advice” under a consultation to be launched by the Treasury this week. The consultation, part of a review of the financial advice business, is looking at ways of making this complex area more affordable for consumers and the ways in which technology could be involved.
Robo-advice is a term used to describe computer algorithms that provide advice on financial products, which the government is suggesting could be a way to make financial advice more widely available.
Harriett Baldwin, the economic secretary to the Treasury, has said people are more likely to seek advice on investments of £50,000 or more. But as only the wealthiest can afford the £150 an hour rate commonly charged by independent financial advisers, more ways of providing advice are being sought at a time when the new pension freedoms are leaving people with big financial decisions.
Baldwin said in September: “The exciting thing about ‘robo-advice’ – a service which uses algorithms to help customers choose financial products tailored to their particular savings goals and risk preferences – is that it has the potential to be much cheaper and quicker than face-to-face financial advice.”
The consultation, which runs until 22 December, will not just cover advice that has a strict regulatory definition, such as full fact-finds on a person’s financial situation, but will also look at broader means of support and guidance on investment decisions.
Launching the consultation, Baldwin said: “Helping hardworking people achieve their aspirations at every stage of their lives is at the heart of our long-term plan. A key part of that is making sure people can access high quality, affordable, tailored advice and guidance to help them make informed financial decisions, whether that is saving for their first home, taking out a mortgage, buying a car or saving and investing for the future.”
