A tough definition of robo advice could be: “Can enable a compliant personalised advice recommendation to be made without the requirement for a human adviser to be responsible for the advice”. We aren't alone in choosing that definition. We think it is what MBIE has in mind when it writes about robo-advice licensing, because they view a law change as necessary to meet this definition.
On the other hand you may take the view that robo-advice is the involvement of technology at any point in a process which may result in a sale, whether that contains 'financial advice' as defined by law. We have some different terms for that - we call them 'adjacent' to the strict definition of robo-advice, here are some current examples to illustrate:
- Adjacency 1: robo ‘nearly-advice’ – best example: LifeDirect, it is robo, but it is a sale without financial advice.
- Adjacency 2: ‘nearly-robo’ advice – uses technology to make the adviser much more efficient at the actual advice process – we think Quotemonster, and QPR fit into this category - these are adviser tools.
- Adjacency 3: ‘technology enhanced advice’. In this case the technology doesn’t play a role in working out the advice (it doesn’t capture requirements and help make recommendations) but it facilitates the process of doing that. Specialised examples include some kiosks and Suitebox.
- Adjacency 4: 'robo-to-advice' which uses combinations of tools to help clients self-qualify, or complete aspects of the advice process themselves, to bring them better prepared into an advice-giving discussion with an adviser.
There is a lot of room for development of effective services in each of these areas. We are very interested in developing services for advisers in the last category.