I remember a few years back when I worked at another media business that we had a presentation from a senior bod about the exciting technological future awaiting the company.

I recall a couple of things from the presentation, one was that the screen for his PowerPoint presentation almost collapsed at the beginning, causing some mirth, but also a phrase that he used that stuck with me. To paraphrase: “To be leading edge is to be bleeding edge.”

It’s one that must be on the minds of the wave of robo-adviser early adopters now bleeding money.

This week Moola, one of the smaller robos, called it a day despite the backing of the massive Mercer operation. Moola (always a naff name), changed hands several times in recent years and struggled to find sufficient customers. In addition, the CEO of Nutmeg jumped ship recently and Investec called it a day on their fairly recent robo foray, Click & Invest.

Robo-adviser Moola to close doors in February

So times are not good for robos but is it all over? I suspect not. At least not yet. But they will change.

Someone much cleverer than me recently pointed out that robos’ main problem is that they are chasing people who don’t have, to put it mildly, much “moola.”

That’s not quite completely true as clearly some people are using them and anecdotally I understand that some of the start-up online financial services, particularly the disruptor banks such as Starling and Monza, are beginning to gain some traction, especially with younger savers. But fundamentally the robos are not working.

Will they ever? Well I think they have something to offer but they need to be much better integrated with disruptor banks, retailers, services that appeal to younger people, social media and the like. They need to reach millions, not thousands, and they are failing to do this.

Probably one route they will go is as white-labelled operations working with third parties. Much of what they have learned will be invaluable in years to come, I suspect, but profits will take a long time to come to come through.

I also expect more Financial Planners to move slowly into this sector. Several are trying lean online operations offering access to some advice at a lower cost but with most things done online. Video technology and online financial management is also improving all the time and planners will be looking to capitalise on this to reduce costs and reach more people, as they need to do.

As my former senior colleague said during his presentation; “better to be settlers rather than pioneers.” Financial Planners and disruptor banks are well placed to be settlers, robos aren't.

Kevin O’Donnell is editor of Financial Planning Today and a financial journalist with 30 years experience.  This topical comment on the Financial Planning news appears most weeks.

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