Rise of the robots
‘Rise of the robots’ was commissioned by Citywire for their asset allocation journal, Asset Allocation 360. In this article, Stuart Fowler sets out a vision of ‘robo-advice’, online interaction with intelligent advice engines, in which
the customer experience is potentially even richer, more personal, relevant and engaging than with a relationship manager or IFA
the links between the client’s goals and the investment solution are more apparent, intuitive and reassuring
the outcomes-driven investment solution is itself innovative
the resulting commercial relationships are more trusting and durable.
He contrasts this with the state of play in these early days of online investment services. Existing UK and US robo-advice businesses like Nutmeg, Money on Toast, Wealthfront and Betterment are not truly innovating. They are merely replicating the offline suitability process for matching conventional volatility-positioned portfolio solutions to personal circumstances and preferences. Changing the means of access does nothing to alter the fact these are not relevant and not truly engaging.
The real innovation will come from quantitatively-managed portfolios delivering goal-specific outcomes in the form, at the time and within agreed and defined tolerances, as collaboratively planned initially, and then adjusted along the way, by interacting with a robo-advisor. These are richly personal and owned by the customer. Conceptually, this is something that barely exists in the offline world (though it is what Fowler Drew delivers as a high-end service) and requires technology to be widely deliverable at lower cost than conventional portfolio management. It will be disruptive by demonstrating the redundancy of existing conventions for products and services, not just by providing an alternative means of access. Indeed, it is quite likely it will replace the toolkits used by human advisors, in a collaboration of man and machine.