On TV last night, every advert was promoting an online service, and Habito came up trumps. One of the new breed of online Robo-brokers encouraging you to remortgage your home and promising not to force you to talk to an adviser. Young people addicted to phones will love it.
However, my dad, aged 81, would die in his shoes, having to remortgage via an app. Hence we have a variety of methods of providing Advice in addition to the heavily regulated mortgage and full financial Advice which come under MCOBs or COBs.
- Basic Advice relates to Stakeholder products. Remember stakeholder pensions? The Labour Government's early naughties experiment with cheap and cheerful products. These were designed to be so simple that Advice wasn't needed, the problem was that no provider brought them to market since they provided no profits.
- Generic, focussed and simplified Advice come in next. All designed to provide more succinct and brief Advice. Generic is more guidance than Advice – for example, you need to look at your retirement Focussed works when a specific area of need has been identified by the client, for example, where to invest their SIPP. Simplified Advice relates to quick Advice, where little needs analysis is conducted. Online is this one's territory.
- Robo advice – ridiculous name since the Advice is not robotised but is run by software algorithms like Amazon's Alexa. This where Habito come in although they do mix it with human intervention as well. Nutmeg is a great app which invests your money in a clearly defined risk category, and the choice of investments is done by the algorithm, not a human. This decreased the fund charges enormously. The use of passive funds works well here rather than active management, although the Robo investment firms do offer this as well.
Hybrid is the way forward. Advisers can communicate via Skype or video or even face to face but use complex software to bring Advice to the table. The role of the adviser is to interpret the often complex nature of financial terms to clients, so they clearly understand.
Someone once said it is easy to make something sound complex, harder to make something that is complex appear simple.