Automated advice already exists and is giving personalised recommendations on workplace pensions. This, says F&TRC director Ian McKenna, is only the beginning
One of the most passionately debated topics in our industry over the past few years has been the possibility of automating the advice process by using technology.
Probably the majority of financial advisers still believe this cannot be done but others see it as inevitable. In this year’s Corporate Adviser Awards’ Best Use of Technology category, there was an entry from an organisation that has made such a service a reality.
While Aon’s Bigblue service won the award for the second year in a row, the judges felt Wealth Wizards deserved to be highly commended. The company launched its first online advice service delivering algorithm-based advice under the brand Wake Up Your Wealth in November 2012. This was rebranded to the new style last year when the company also acquired Opal Benefits, a well-established employee benefits firm.
It is important to note that not all cases can be processed without human involvement. Users are guided through a process that involves a series of questions designed to identify if the customer is suitable. If at any stage a response is given that warrants further investigation, the member is removed from the automated process and referred to a human adviser. Depending on the outcome of the investigation, the member may be returned to the automated process or, if appropriate, receive individual counselling.
At the end of the process, each member receives a personalised advice recommendation for which the firm takes full regulatory responsibility. As would be expected with a digital service, all member contact is recorded and, once a member has received advice, they are able to update this at any time, 24 hours a day, 365 days a year. In addition, the service contacts the user every 12 months to ask them to update their information to ensure that the advice remains suitable. It is specifically designed to highlight changes in financial or personal wellbeing that may otherwise go undetected in a normal employer-employee relationship.
Where employees do not wish to receive online advice, a full range of other channels including telephone and face-to-face are offered. All employees are contacted both electronically and on paper to make them aware of the advice offer. In practice, the majority take the online option.
The case study submitted by Wealth Wizards as part of the Corporate Adviser Awards entry, which I am referring to with the consent of the firm, involved the online provision of full regulated advice – as defined by the FCA handbook – including a personal recommendation, for up to 660 emp-loyees of the company that was adopting a new group personal pension.
A bespoke website was created where the advice was explained and primarily delivered. This included the creation of an online educational seminar using video and animation to help scheme members understand the options available. The process also included offering ethical and Sharia fund options to all employees.
Every piece of advice was fully documented, creating a robust audit trail for all who engaged in the process, whether they took advice or not. This was a key deliverable for the employer.
Currently, the service is automated only for the accumulation phase of advice, although Wealth Wizards is exploring the at-retirement process. While the company is unwilling to state what percentage of members are processed purely online, in delivering a service that provides digital advice with the regulated firm taking full responsibility for the recommendation, it is demonstrating to the marketplace what is achievable. In addition to its own service, the company offers a white-label version that can be adopted by other benefit consultants.
The service will be refined and become more sophisticated in the coming months and years, enabling more and more cases to be processed in a fully automated manner. But even in its current evolution, it has passed a hugely significant industry milestone.
If our industry can learn from what Wealth Wizards and a handful of other innovators are achieving, this will hugely increase the probability of auto-enrolment successfully changing savings behaviour in the UK.