Investing without FA

Terry98

What about using Robo-Advice!

http://www.moneyinternational.com/investments/robo-advice-new-frontier-financial-advice/

dunstonh

Terry98 wrote: »

What about using Robo-Advice!

http://www.moneyinternational.com/investments/robo-advice-new-frontier-financial-advice/

Robo-advice is not really advice. Most IFAs will have a robo-advice offering but it will be mainly aimed at the smaller investor.

Effectively, it is a handful of questions leading to a pre-built solution. Nothing personalised. Great for the really lazy but given the way risk profilers often give the wrong outcome, it is not perfect. it is not seen as a distribution to replace DIY or IFA. Rather than a middle ground aimed at those that have too small amounts to get advice.

Terry98

dunstonh wrote: »

Robo-advice is not really advice. Most IFAs will have a robo-advice offering but it will be mainly aimed at the smaller investor.

Effectively, it is a handful of questions leading to a pre-built solution. Nothing personalised. Great for the really lazy but given the way risk profilers often give the wrong outcome, it is not perfect. it is not seen as a distribution to replace DIY or IFA. Rather than a middle ground aimed at those that have too small amounts to get advice.

That is not exactly how The Times described it on Saturday. You need a subscription to read the full article. http://www.thetimes.co.uk/article/the-rich-and-the-march-of-the-robots-82k7wlj93

dunstonh

Terry98 wrote: »

That is not exactly how The Times described it on Saturday. You need a subscription to read the full article. http://www.thetimes.co.uk/article/the-rich-and-the-march-of-the-robots-82k7wlj93

I dont know how the times are putting it but that is how it is seen within the industry.

grey_gym_sock

how does the times describe it, then? from the URL, i'm guessing that they're suggesting IFAs are among the many jobs which will be made obsolete by technology?

i don't really see it, for IFAs. robo-advice might be made technically more accurate, but part of an IFA's job is personal interaction: either assuring clients that they are OK and should stick with a strategy, or telling them things they don't want to know (when they have unrealistic expectations).

and given that advice is already restricted to richer people, do they really want their advisers replaced with robots, even if robots can do as good a job? would people like the waiters in expensive restaurants replaced with robots? that would have some novelty value, but isn't part of the pleasure of the experience that there are real people following your instructions?

TheTracker

I'd pay hundreds of pounds for a nurses bedside manner, tens for a GPs, single digits for a waiters, and at most, pence for a financial advisor.

An IFA runs through an algorithm with a customer, and based on a knowledge base recommends a course of action. As does a nurse, a GP, and a waiter.

Roll on the robo revolution.

I see the IFA as tomorrow's bank teller. Not much intelligence or education required, providing a valuable service, but not one that a silicon chip should be worried about.

grey_gym_sock

TheTracker wrote: »

I'd pay hundreds of pounds for a nurses bedside manner, tens for a GPs, single digits for a waiters, and at most, pence for a financial advisor.

An IFA runs through an algorithm with a customer, and based on a knowledge base recommends a course of action. As does a nurse, a GP, and a waiter.

behavioural errors in investing can cost people a huge amount. an IFA would be cheap, if using 1 means you don't lose lots of money on dodgy stock tips - or sit out the stock market for 10 years, because of listening to doomsters. so i think IFAs can be worth it for some people. others may be so determined to make mistakes that they won't listen to an IFA.

that's the good reason. then there are the bad reasons, including the "prestige" of casually mentioning that you have an financial adviser. clearly not something that somebody with a username "TheTracker" would go for, but some people like that kind of thing

Roll on the robo revolution.

I see the IFA as tomorrow's bank teller. Not much intelligence or education required, providing a valuable service, but not one that a silicon chip should be worried about.

when silicon chips can be worried, the technology will really be getting interesting.

Terry98

grey_gym_sock wrote: »

how does the times describe it, then?

Sorry I only read it in the paper , not online, hence the original link to Money International.

From what I remember they work out your risk profile by a questionnaire and then they come up with a portfolio to meet your needs.

The portfolios aren'’t actively managed.They make small corrections occasionally.

In the end it is how the investments perform is all that matters.

Humans are humans and robots do not make mistakes......it's only the humans that program them:rotfl::rotfl::rotfl:

dunstonh

From what I remember they work out your risk profile by a questionnaire and then they come up with a portfolio to meet your needs.

That is correct. However, risk profiler questionnaires have a failure rate. Even the FCA acknowledged that and they require full advice cases to go further than just the questions asked. Robo-advice does not need to as it is not full advice. How the FOS will look at these is a bit of an unknown and many robo-advice offerings are within a regulatory sandbox at the moment. This is a new thing created by the FCA. The FCA won't come down hard on them for mistakes as long as they are corrected and not intentional.

The portfolios aren'’t actively managed.They make small corrections occasionally.

All of them are actively managed. They have to be (i.e. who decides the asset allocations - that is a management decision). Most of them use passive underlying investments.

Linton

Terry98 wrote: »

Sorry I only read it in the paper , not online, hence the original link to Money International.

From what I remember they work out your risk profile by a questionnaire and then they come up with a portfolio to meet your needs.

The portfolios aren'’t actively managed.They make small corrections occasionally.

In the end it is how the investments perform is all that matters.
........

What really matters is investing at the minumum risk level that can reasonably achieve your return and timescale objectives, and whether that risk level is acceptable to you. Simply chasing maximum return is poor investing in my view, at least if you are investing amounts of money that seriously matter. That is the problem with simplistic predefined portfolios. People's objectives and level of risk acceptance can be complex matters that they may well not understand themselves. Which is why a human IFA is essential for people with large amounts of money but little experience. The difference between robo-investing and working with an IFA can perhaps be likened to the difference between curing your illness by Googling your symptoms and buying the best sounding remedy over the internet and going to see a GP. For trivial problems the Google approach may well be easier, for anything serious it's a different matter.