'Fewer people will want robo-advice than we think'

A director of a savings organisation believes that the number of people who will want to use robo-advice may have been overinflated.

Charles McCready, programme director, at TISA UK, expressed his scepticism about automated advice programmes as the future of advice fell under the spotlight at today's Morningstar Conference.

A panel, speaking to hundreds of delegates at the Park Plaza Hotel in London this afternoon, debated how the Millennials will invest.

Mr McCready said: “I’m slightly sceptical and I think people will use robo-advice less than people in the industry currently think.”

He believes younger people still like to hear answers from a person – not a machine. He cited trials going back as far as the 1990s using computers to generate answers solving problems on various different matters.

However, he does believe younger people “have a greater propensity to use online utilities”.

Asked if financial advisers will become extinct as far as millenials are concerned, Freddie Ewer, co-founder, of financial education body RedSTART, said the wealthier ones will still be able to afford IFAs.

He said: “I do think alongside this that robo-advice, if very carefully designed, has a role in servicing people who cant otherwise afford IFAs.

“If we can capture all of the good aspects, that’s a difficult thing to do, but there’s a whole section who cant afford the fees but need the help and support.”

Engagement is critical, he said, because most younger people glaze over when listening to information on ISAs and pensions.

James Rainbow, head of UK financial institutions and strategic accounts at Schroders, said: “Do I think that advisers will be extinct or driven outside the financial advice world? I think the completely opposite is true.”

He suggested that, actually, automated services could make interacting with a person at the end of the process much easier.

He said: “If you look back to 1999-2000 with the initial excitement about tech changing our lives, it did, but not back then. A tremendous amount has changed since.

“The solutions born today, I don’t think will be the ones we look back at in 15 years that changed our lives.”

Emma Wall, senior editor, Morningstar, interviewed a number of young people around London and showed her video vox pop with their responses. There was widespread lack of interest when asked if they would seek out a financial adviser, with many dismissing the idea out of hand.