Chief Executive at FEIFA / FECIF Secretary General
2019 – the year of the robo?
Happy New Year! And what a year it may well turn out to be.
Despite the deluge of Regulations and Directives in 2018, I believe that it will be the next 12 months when we will see and feel the true effects of these.
In addition, will 2019 see the true rise of so-called robo advice?
As you are no doubt aware, there has been a great deal of interest and activity in the area of automated advice in recent times. Whilst originally seen as a major threat to the mainstream retail advice sector, the impact so far has been fairly minimal. This is no doubt due to many factors but I personally think that one of the major issues has been timing – those services that have launched are probably too early.
At this stage, one of the problems with fully automated advice is that the business models simply don’t work commercially. In the UK, for instance, the average client acquisition cost is in excess of £200 and with an average investment in the lower tens of thousands it is impossible to make any reasonable return. Figures released by Nutmeg not so long ago showed that, on average, clients needed to be with them for at least 10 years before profitability was reached!
This obviously puts the entire business model in doubt and, in particular, the ability to...