Our CTO, Peet Denny made an appearance on CNBC, talking about how robo advice can revolutionise investing.
Read the transcript here:
Peet: We've done a long study looking at the way people think about their retirement and what plans they have in place for it. What we've found is 55% of Britons have said that they will plan for their retirement when they retire. If you look at the figures about how much money they're putting aside for it, the average Briton is not only going to woefully unprepared for their retirement, they also don't know where they can turn to get advice.
CNBC: So, what would be the game-changing technology? Would it be the robo-advisers, what would it be, how do people get advice and avoid being woefully underprepared?
Peet: I think the first thing is that everybody should have access to a regulated financial planner, somebody who is really qualified to give this advice. And there are very few people in the UK comparatively to give this advice, only 23,000 or so. This means that advice by somebody who is qualified to give that is out of reach for most people. This is where we think technology comes in and artificial intelligence is being used today to give people advice about how much money they should be putting aside, specifically for their lifestyle, for what type of person they are, how risk averse they are, how easy it would be for them to lose a lot of money. Based on these things, a robo adviser is able to give advice on how much they should save and where they should invest it. And then further down the line, we expect that people should be able to keep on top of their finances and feel in control of their finances, not delegating this to the government or their employer, but having the tools and the expert help to be able to do that themselves.
CNBC: How would that work in practice though? You say there aren't enough resources in Britain to provide 'human' advisers to talk to the people who aren't prepared for retirement, how would they have enough money to have robots come and get in contact with the people?
Peet: I think one of the main attractions of robo advice is that you're able to train artificial intelligence to give the advice that a qualified financial planner would give, and to give it consistently and to do it without making mistakes, and to do it a lot cheaper. What we've been able to do at Wealth Wizards is give this advice for maybe a tenth of the cost of normal advice. It can even be made available to people through their employer as an employee benefit. There are several robo advisers out there at the moment and they are all pretty sophisticated. Over the next few years, they are going to be more and more sophisticated so that they can tell more about who you are as a person and tailor the advice to your specific circumstances.
CNBC: Do you foresee a point in the future where the robo adviser fully replaced the human adviser or do you think they we'll still want to see that human touch such as a handshake or a warm smile?
Peet: I think that the human element is really important and robo advisers are going to become more and more engaging for people. I think it's difficult to replace the human touch. One thing that;s working really well at the moment is this hybrid approach where you're interacting with a human, you're making eye-to-eye contact, you're talking in a very informal way about your goals and who you are as a person but then in the background, their ability is being augmented by an AI who's an expert in what you want.