The Government recently announced a £10m fund to take further advances in “industries of the future”, meaning flying cars and robo lawyers are a step closer to becoming a reality.
The money will be used for 15 unique projects with the ultimate aim of improving efficiency in the public sector and saving the taxpayer money. Projects that have received funding include the development of blockchain technology to help regulator Ofcom manage UK phone numbers.
It is the latest sign that politicians are willing to back and promote technologies that use artificial intelligence to improve the everyday lives of consumers.
Robotics have also transformed the way our pensions and savings are invested, giving Britons access to a wider range of funds at a cheaper price. No longer do savers have to rely on fund managers and financial advisers to take investment decisions on our behalf. It is now possible to invest just a few pounds a month into any of the major stock markets around the world, and consumers don’t need a mountain of investment knowledge to do it. The sector is growing fast, with the number of customers holding DIY investment accounts rising from 4 million at the start of the year to 4.5 million by August and the value of assets under management now at more than £200bn, according to the financial website Boring Money.
Despite fears it’s man versus the machine and that robots will take all our jobs, experts broadly agree the reality is this will never happen. Yes robotic advancements will mean that a job can get done with fewer humans involved in the process. But human interaction is always needed to ensure the job is carried out effectively. Take the example of driverless cars- they still need a body behind the wheel for safety. Similarly, a hospital still needs a surgeon to instruct the robot where to enter the body. In area such as financial advice, where there is a shortage of specialists, digital platforms mean the same number of advisers can help more people.
While tracker funds are not designed to make proactive investment decisions - instead simply tracking all the companies in an index such as the FTSE 100 - a human mind will always be needed to make sure the allocation is being done accurately.
Some robo advice firms go beyond this and offer a hybrid of traditional wealth management and passive investing. They use human analysts to take some investment decisions on their clients behalf - such as moving money between different indices or commodities when they feel volatility is on the way.
The problem with passive investing on its own is that customers may not have the knowledge to assess their own appetite to risk. Just because someone thinks they have a high risk appetite, they may not have an appropriate financial safety net to fall back on.
This is where advisers can play an important part. Daniel Kahneman, a Nobel Prize-winning economist, recently argued that financial advisers have a major role to act as therapists for investors. "When bad things happen, you have to be there. [Clients] need to have a sense that there's someone that they trust and has their interests in mind and who knows what they want,” he told an investment conference in Chicago.
The recent slump in global stock markets is proving an important test for robo wealth managers. An advantage of robo advice is that customers can easily check the value of their portfolios daily through an app.However in times when the market is troubled, this isn’t always a benefit.Novice investors will currently be watching the value of their pensions or investments fall and wondering whether they should pull out or adjust their holdings. This is where communication is key, and it is important for companies to build a good relationship with their clients to stop them from making any short-term decisions they may regret later.
Digital advances cannot be ignored and are now demanded by investors who want easy access to their portfolios at a price they feel is affordable and justified. Robo advice is an important part of that, but human reassurance will always be welcomed by customers at times of market uncertainty. In this sense, the human advice sector that embraces intelligent automation will have an important role play over the next year.