Man or Machine - to settle for 'robo-advice' or not?

Man or Machine - to settle for 'robo-advice' or not?

There are not enough practising Financial Advisers in the UK to service the needs of the population.

The UK population is around 66 million. Assume half of those people need advice, that is 33 million people. Incidentally, this is close to the number of households in the UK. To help everyone, you would need around 351,064 advisers. According the Financial Conduct Authority, in 2019 there were 27,557 retail advisers, so we would need a capacity increase of 1,174%.

This is not going happen soon, so what are the alternatives?

One solution is so-called ‘robo- advice’. You enter your details and complete some questionnaires on a computer. The computer follows a set of algorithms and comes back to you with a suitable course of action for you to take. Providing you have understood the parameters within which the assessment can take place, for instance is the computer searching the whole of the market for a solution or just one company, this can be a very efficient and cost effective route in which to get started.

To put it into human context though, it would have the name of Mr Rational. All of the questions it asks have predefined answers so any prescription it comes out with is also pre-determined. If only life was that simple.

So, like all things in life, there needs to be a balance. Before deciding on the right route to go down you need to take yourself through a small assessment. A little time spent in prior preparation and planning can save a fortune in the long run. As an example, I would like to share the sort of assessment I would go through.


What is it I am trying to achieve? If it is very simple and I fully understand all the aspects, perhaps the easiest and cheapest route is to go down the robo-advice route.


What result am I trying to achieve and how important is it to my financial future? Most actions regarding your finances are taken way in advance from when they will be needed yet you do not see the results for some considerable time. It is very difficult for the human brain to envisage compound growth. In this scenario, I may want a second opinion on whether I am starting on the right- track.


My finances are entwined with another and it is not just about the money or investments. The immediate goal here tends to be clear communication rather than investment return. Again, this is where face-to-face may be more useful.


Most of us start off in the financial world with very simple needs and plenty of time to build up a reasonable portfolio. Our earnings are low and we just want to get our foot on the first rung. In this case, the prospect of a face-to-face meeting may be too much of a process to spur you to action.


I am dealing with numerous issues, all intertwined. There are tax issues, investment issues, drawdown issues, inheritance issues and major decisions to be made where the whole process seems well out of my comfort zone.  

I want to be able to deal with one team that will follow a process with me to come out with a clear picture of the way ahead that meets all of the family’s needs. Having done all the hard work at the beginning, I want this team to run a review process that checks in with me and keeps everything on track. 

The plan needs to be flexible enough to accommodate all of the googlies I will inevitably throw at it and I want them to be in a position to recognise when they need to guide me to additional help and resources when needed. 


We seem to get confused between cost and value. Look at it in terms of the return rather than the outlay. Spread over time, a higher initial cost may end up returning a significantly higher amount in the future.

A shared objective 

I started this article by highlighting the shortfall in qualified advisers to demonstrate that there are no enemies in the world of financial planning. We all share the same objective and that is to make sure everyone’s finance knowledge is sufficient to enable them to take care of themselves and their families. 

I know from the fact you read this that I am preaching to the converted; yet as a society the message does not seem to have got through. There are may ways to get to financial freedom, the important thing is that you choose one. 

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