Robo Advice – 5 Key Factors to Success

Robo Advice – 5 Key Factors to Success
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With all the hype currently surrounding robo advice, many financial services companies may be forgiven for believing that they only need to set up such a proposition in order for it to be a success. However, the real challenge does not exclusively lie in providing the means by which cost-effective advice can be delivered to the mass market, instead it lies in being able to successfully engage consumers with their financial situation and goals. The question is how?

We have identified 5 factors which we believe are key to the success of any rigorous robo advice solution.

1 – Engaging the consumer

Currently, a real need exists to increase consumers’ engagement with their financial life and enable easy access to robust financial advice for all. However, for many consumers, the breadth of choice available, when it comes to making financial planning decisions, only serves to create confusion and adds to the complexity often resulting in no decisions being made at all.

Robo advice has the power to change this outcome by engaging consumers with straightforward and easy to understand financial advice at a fraction of the cost of traditional face-to- face advice.

Many successful robo advice processes employ behavioural finance and subtle gamification methods, offering feedback and encouragement at important milestones and presenting users with a hub page illustrating their progress through completed sections in order to help maintain consumer engagement. Such online, interactive tools, which are visually appealing and have a sense of momentum, can attract those who might otherwise associate financial planning with dry, boring texts and unfathomable graphics.

However, for consumers to truly engage with robo advice, establishing trust is essential. Not only must consumers be able to trust the advice given but must also be able to trust the robo advice proposition itself with their sensitive financial and personal information. Honest feedback and reliable endorsements from individuals in analogous financial situations are vital to building consumer confidence and engagement in an online robo advice process and its outputs.

2 – Realistic expectation of range and level of returns

Robo advice presents a completely new world where advisers are, primarily, no longer required to take part in the advice process. In such circumstances, it is more important than ever that individuals are provided with financial forecasts that are as realistic as possible. This will not only help individuals to understand the potential range of outcomes from different financial strategies, but will also allow them to make informed decisions which will directly impact their future wealth and lifestyle.

This means that not only should the overall forecasts be realistic but each individual scenario, which makes up the forecast, should also be sensible and capable of occurring. Suggesting a potential outcome which, in reality, is impossible is obviously not particularly helpful to consumers when it comes to making investment decisions.

3 – Risk Suitability Assessment

A key area, which any financial services company must take into account when looking to build a robo advice solution, is that of risk suitability assessment. In the UK, it is clear that robo advice needs to meet the same suitability standard as traditional advice. Therefore, any risk suitability tool must be rigorous and robust in order to ensure an accurate measurement of a consumer’s tolerance to risk and capacity for loss.

A thorough and comprehensive assessment process will not only help to communicate the risk of any potential losses but will also help support the selection of suitable investments which meet a customer’s objectives and matches their capacity for loss whilst providing a clear audit trail of the suitability process.

4 – Personal Advice Given

When it comes to providing financial advice, no two individuals will have the same set of circumstances or goals and so they should not be treated in the same way. Some people may have a simple financial matter where they are just looking, for example, on how best to invest their ISA allowance, for these a streamline solution may be appropriate. Others, however, may have far more complex financial affairs and require more in depth help with issues such as estate planning or complicated retirement decisions. Those with more complex needs should be directed out to full advice solutions suited to those needs.

As everybody’s situation is different, in order for a robo advice proposition to be successful it must be able to provide appropriate personal advice which not only reflects a consumer’s individuality and specific objectives but is also not detrimental to their other financial needs.

5 – Fully automated with appropriate compliance reviews

Robo advice has the potential to form the cornerstone of any solution by helping to deliver advice in an affordable, compliant and user friendly manner to everyone, at all stages of their lives.

By automating the advice process so that it can be delivered remotely and driven by the consumer, costs will be cut sharply as a result. At the same time, consistent quality and thorough documentation generated by the process will provide a full and reliable digital paper trail to ensure regulatory compliance.

Final Thoughts

Robo advice has the potential to make an enormous contribution to the way in which financial advice is delivered in the UK.

By implementing our 5 key factors, not only will successful robo advice solutions be able to provide easily accessible and regulatory complaint personal advice but, ultimately, they will help deliver a credible, intuitive and low-cost experience which aims to engage consumers with their finances and make the most of their hard-earned savings.

More information on EValue's Robo Adviec solution


Ben Cicchetti, EValue's Marketing Manager

Ben, an Associate of the Chartered Institute of Marketing, has worked in the financial services and technology industries for over 10 years. He is passionate about injecting creativity throughout our marketing and communicating how our solutions can truly make a difference to people’s financial futures.

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