Would you trust a robot for all your financial decisions?

15th October 2015

At the end of September the Financial Conduct Authority (FCA) held a conference to discuss the growth of robo advice in the UK. Robo advice is an online service which uses a mixture of algorithm and technology to create an investment strategy.

Jonathan Watts-Lay, Director, WEALTH at work, comments, “Although there is a place for robo advice for people who are saving and want to make simple investment choices, it is also important to be able to discuss these choices before making a decision. This is particularly the case for those who are nearing retirement as the decisions are so much more complex and the implications of getting a decision wrong are so much bigger.”

He continues, “I’m sure an algorithm could be created that allows for the many different scenarios that need to be taken into consideration at retirement such as; all pensions (whether defined contribution or final salary), other saving such as ISAs and deposit accounts, tax issues, health, longevity, risk profiling and partners etc. However, this would require a lengthy online process, which is solely reliant on a person’s interpretation of the questions and their response to them. I suspect that many people would prefer to arrange to talk to an adviser whether over the phone or face-to-face, to benefit from their experience rather than trust it to a robot!”

He adds, “In addition, under the new pension rules many are likely to need help with their finances into old age and whilst many will be computer literate, financial decisions may become harder and often have emotional elements, which robo advice will struggle with. My mother is 80 and computer literate, but she increasingly wants help and reassurance that the financial decisions she is making are the right ones.”