The hype around robo-advice “has gone unchecked and needs a referral to the fact department", says Adviser Intelligence founder and chief executive Jacqui Henderson.
In a blog post this week, Ms Henderson said there is an industry misinterpretation of what robo-advice actually is.
“Linking the terms ‘robo’ and ‘advice’ together is to me the same as saying Pokemon Go qualifies as an Olympic Sport... it all depends on your definition of sport,” Ms Henderson wrote.
“Robo is using artificial intelligence to mimic and predict human behaviour.
“Advice, in its true nature, is goals-oriented and holistic with interrelating elements of a consumer’s cash flow, investment, super, risk and estate planning etc. No robo-advice offering I have seen, and I’ve seen a few, including the Betterments of this world, has solved the challenges of a) behavioural science and b) advice that is goals-based and holistic,” she wrote.
Ms Henderson argued that the industry should either agree to a functional definition of robo-advice or ditch the term altogether. She suggests using the term 'digital advice automation' instead.
“The expression ‘digital advice automation’ more accurately reflects our current position. We human beings will always need human connection, augmented by smart, semi and fully-automated digital tools,” she said.
“To a consumer, financial advice is holistic. It needs to take into consideration proper needs analysis, goals, the client’s actual position in regards to cash flow, risk protection, tax, structures, estate planning and so on. There is no ‘robo’ that does this.”
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