Robo advice for pension members would work better in data rich “big scheme environments”, but has yet to see good solutions in the at-retirement space, Aon has said.
Speaking at an at-retirement media briefing yesterday, 11 April 2018, Aon defined contribution proposition leader, Debbie Falvey, said that it is the “only logical way” to make advice widely available, but at the moment would only work for simple decisions.
She said that the complex nature of at-retirement choices means it hasn’t seen any good solutions in the robo advice area, and also warned of members getting bored while inputting their data.
Falvey said: “There aren’t enough advisers in the world if everybody wanted to use one, and people are reluctant to pay, if their scheme is going to pay for them that’s great, but that tends to be limited. It is logical to think that you can start to roboise the advice process.
“At the moment it works quite well for simple decisions, am I paying enough based on what I want and the contributions I’m making. Yes or no? Do I want to change my investment strategy because mines to risky?
“What we haven’t seen yet is any really good solutions around the at retirement choices, and that’s because it’s very complex”, Falvey added.
Furthermore, she said that inputting the data can be tedious and that success lies in using it where the data already exists such as a “big scheme environment”.
The Financial Conduct Authority is currently testing robo advice, and in November 2017 FCA head of strategy and competition Bob Ferguson said that it could help boost competition between advisers and enable more people to access financial advice.
However, last November a nationwide survey found that 76 per cent of advisers were worried about long-term regulatory and compliance challenges.
Falvery concluded: “People seem to react quite well to it, whether they will fully trust it or feel comfortable, I think it’s unproven at the moment but seems like the only logical way to make it available to people in a cost effective way. So watch this space.”