Hargreaves Lansdown Portfolio Service

Al.

bigadaj wrote: »

The limited review of robo I've seen is that the costs can be maintained at a low level if not a particularly low rate. As an ifa are you really going to take clients on with little or no initial lump sum and can afford to save a hundred or two a month or even less, surely your fees will preclude this? This is where the gap lies with financial advice and is arguably where it is most needed for both individuals and the government.

Wrong perspective (imho). Robo advice offerings will fail if they a) don't nail their business proposition and route to market with laser like incision, but more relevantly b) try to scale up and capitalise on the economies of scale that they undoubtably benefit from.

Your view of robo clients is also a little wide of the mark, I think.

Al.

dunstonh wrote: »

In the real world (outside of MSE where most people live) cost is not a primary consideration.



Most robo offerings cost the same ongoing as an face to face/postal/email adviser. With robo you are paying for the interface rather than the advice. Hence my belief that it will be the ones that can offer both the interface and the advice that will succeed.

The value comes not so much in quantifying the value of professional advice; rather, in the benefit to both parties (in particularly the client!) of the relationship.

In five years, financial advice for the vast majority of people (even compared to the current take up of 'wealth management' or 'financial planning') will be as near as damnit, free.

bigadaj

Al. wrote: »

Wrong perspective (imho). Robo advice offerings will fail if they a) don't nail their business proposition and route to market with laser like incision, but more relevantly b) try to scale up and capitalise on the economies of scale that they undoubtably benefit from.

Your view of robo clients is also a little wide of the mark, I think.

Fair enough, this is obviously a marketing perspective which I hadn't appreciated in both senses of the word. Your response above means nothing and is just full of marketing phrases and a certain type of bingo.

Surely robo would be used for intermediate cases, with those whose pot or contributions are limited such that the overall costs for an ifa are too large to be absorbed by the value that could be added. The actual robo proposition simply saves an individual the time and effort in diying and doing the little research and reading needed and/ or lack the confidence to undertake and take responsibility for the decisions themselves.

Al.

If it means nothing, apologies. Not so much a marketing perspective, Robo advice has been a big part of my thinking for the past few years.

I don't mean to be facetious, but I didn't understand what you were trying to convey either. Yes, Robo does save time and affords a measure of confidence, but if Robo costs are lower than practically everyone and for a service that delivers, why only intermediate value if the need is suitable?

http://www.alrush.biz/twentys-plenty/

bigadaj

Al. wrote: »

If it means nothing, apologies. Not so much a marketing perspective, Robo advice has been a big part of my thinking for the past few years.

I don't mean to be facetious, but I didn't understand what you were trying to convey either. Yes, Robo does save time and affords a measure of confidence, but if Robo costs are lower than practically everyone and for a service that delivers, why only intermediate value if the need is suitable?

http://www.alrush.biz/twentys-plenty/

No problem, I probably need to apologise for my grumpy response.

The fact that the average person needs to have something sold to them in overly simplistic terms rather than being able to choose a purchase on the basis of quality, as in appropriateness for purpose, and cost consideration is just something I find annoying; as in infantilising people. The flip side is then of course that the poor consumer is too stupid to have made an informed choice and so gets compensation down the line when they haven't had the obvious not only pointed out and explained to them but have the documentary trail to prove it, which you are no doubt only too aware of as an ifa.

My point is that the wealthy can not only afford to pay for prescriptive advice but also the sums involved mean that if can also be justified in straight cost and value terms.

Robo advice can be replicated by consumers fairly readily, it's just a process of determining attitude to risk by questionnaire and then applying that to a mix of asset classes. One of my concerns about financial advice in general is that it is obviously limited to certain asset classes and in an ideal world someone's entire financial situation would be considered, everything from debt to property as well as pensions and investments, though advice can certainly help people's future and circumstances.

Interestingly who do you see as your target market for robo if it's not the 'squeezed middle' or similar analogy for those with moderate incomes and relatively limited funds?

Al.

No need to apologise - no offence meant or taken.

Still working, get back to you properly later.

Al.

It isn't the tech that's the issue, or the sales process, I do understand where you’re coming from though – and I don’t disagree. I had some recent car buying trauma, so I'll apply some parallels. Here is the blog I did on it – should there be a fiduciary responsibility? I can only offer my meandering opinion but it’s the way I see it - it refers specifically to a matter involving a pension trustee who wasn't doing his job properly. Yes, we should be compelled to act under a sense of fiduciary responsibility, we’re dealing with clients futures, their retirements. Going to FoS to argue the toss later just doesn’t cut it.

http://www.alrush.biz/fiduciary-responsibility/

In itself, is there anything wrong with selling? I suppose it depends on the manner. The order taker, wanting your money before moving onto the next client. A good salesman, using integrity and process to fit the product to a clients' needs based on integrity, knowledge and experience. Must have the capability and willingness to stand or fall by their advice by suggesting you possibly don't proceed, spend less or consider other options before you commit your money. Bad Salesman - Someone who simply doesn’t give a damn.

Fiver is only for someone with simple needs. I make that quite clear. I take on board completely though, the issue of infantalising clients and the fact that my portfolios may be replicated. Do I care? Not at all. I think people are prepared to pay a highly modest and fair premium for having someone sit on their shoulder, helping them. It’s the same as being a critical friend, a sense check – someone to turn to for objective and impartial advice. It’s much cheaper than H-L so in principle, it’s a good idea for most.

The dumbing down almost gives people the chance to stop taking on responsibility for their actions. I can sit down with a client, and will do so, four times this week. I know when I can give someone a nudge, which sounds rather domineering, but isn’t. I know (and I guess all other advisers reading this, will too), that very quickly after meeting clients where their plans need some revision, where I need to encourage continuity, where I need to apply some diligent steering and where you have to apply a delicate (and no so delicate at times) reality check.

Fiver a Day, and other Robo props, don’t allow that. It’s something that worries me. The value I bring to clients will be in the nature of my relationship, not in the terms of advice. And I’m certain too, that other advisers embarking on this route will feel that too. So, already I have changed how it’s going to work. Clients will get my mobile number and I’ll be available gratis, on a fair use basis. But I, and other so called Robo advisers, need to have that connection somehow.

So far, in answer to your final point, there are a few identifiable types of client. The average amount being invested is between £35,000-£50,000. Close in number are clients starting off with £1,000-£2,000 and setting aside £150-£200 per month. There have been a number of investments in the region of £250,000 although they are the exception. I decline c 20-25% of applicants based on unsuitability (ie; not enough in emergency savings etc).

Having said that, financial advice in the UK is very strong. In between driving to Anglesey this week, Bristol, Brize Norton, Whitehall and High Wycombe, I have six hours of professional development to fit in! I like to think that many cowboys have left, and that can only be a good thing.

Thrugelmir

Al. wrote: »

Wrong perspective (imho). Robo advice offerings will fail if they a) don't nail their business proposition and route to market with laser like incision, but more relevantly b) try to scale up and capitalise on the economies of scale that they undoubtably benefit from.

Your view of robo clients is also a little wide of the mark, I think.

Mumbo jumbo. What's required is plain English.

Al.

Fair point!

dunstonh

Nutmeg have reported a £5.3million pre tax loss for 2014 (it was a 3.6m loss in the previous year).

It only has a turnover of £635,381. (up from £103,903 in previous year). So, that is one hell of a loss on a turnover that is comparable or smaller than many small local IFA firms.

They do stand to be a potential winner out of the FCA review into advice (which is expected to make robo-advice more available). However, that same review is going to see more IFAs entering the robo-advice arena and being able to move significant numbers of their own clients on to their own bobo-advice model, then the are likely to be casualties. So, they go from being one of a handful to being one of hundreds or thousands.

With results like that, it suggests that additional funding will need to be secured. It says the directors have a reasonable expectation of securing additional funding from shareholders and new investors should this be the case.