IFAs remain resilient despite rise in robo-advice

Despite the rise in the use of robots as employees in the workplace, IFAs remain adamant that such technology will not replace their human face-to-face investment advice.

Although robots and automation are increasingly infiltrating the financial services industry, experts argue that there are certain matters which robot advice cannot be used for; robo-advice generally focuses on investments which relate more to saving money rather than providing advice. For the sale of financial final products, clients require face-to-face advice…

Additionally, robo-advisers lack the learning and experience which is picked up on the job while working in the marketplace. Robo-advisers also lack the ability to adapt to a client’s response and body-language during meetings…

However, there remains the argument that robo-advisers will save people money and may be appropriate for the absolute bare basic investor. The robo-advisers have proved that they are able to look at volatility in the market and allocate accordingly…

The conclusion appears to be that if people want to pay a low price they’ll choose the robots. Conversely, those wanting  a more detailed report will be willing to pay for a higher price and choose face-to-face advisers…

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FCA Announces that IFAs are to Disclose Esoteric Investment Recommendations


The FCA has recently announced that IFAs are to disclose more risky investment strategies which they have recommended to their clients

The FCA’s reforms follows its review of the Financial Services Compensation Scheme (FSCS); from 2013-2016 around a third of FSCS claims were linked to the sale of esoteric investment plans by Advisers.

During the consultation The FCA did not address the proposal that Advisers selling higher-risk products were to pay more towards the money pooled in the Scheme.

However, The FCA has agreed to such reforms as adding a new section to their online reporting system, GABRIEL, for calculating risky future levies. This will come into force on 1 April 2018. Other confirmed reforms include ordering Llyod’s of London to contribute to the funding that comes from retail firms.

A full list of the reforms will be accessible when The FCA publishes its papers….

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Robo-advisors are changing wealth management

Robo-advisors are changing wealth management

It’s here. The rise of the machine. Or perhaps a more appropriate phase would be the tsunami of robots, as technology sweeps across industries, disrupting the norm and throwing civilians jobs into question. First it was the industrial industry, now the tidal wave has reached the financial industry – with wealth management at the forefront of FinTech investment.

robo-advisors are changing wealth management

Automated financial advisors, also known as robo-advisors, are changing the landscape of wealth management. Platforms like Hedgeable and Wealthfront in the US and Nutmeg in the UK are providing personalised portfolios for their customers, using increasingly more sophisticated algorithms and drawing from ever larger data sets. The CEO of robo-advisor Hedgeable has predicted that, in the coming years, old fund managers will become misinformed due to their lack of efficiency. Already, “digital” wealth management assets’, including those at traditional firms, has reached an estimated $55-60 billion.

Robo-advisors have reduced costs by reducing one of the major costs to the financial sector – salaries. With low barriers to entry, the number of successful start-ups in this sector is high. This in turn increases competition, further driving down the cost of digital wealth management services. Robo-advisors have also made investing more accessible for novice investors and the mass affluent, a market segment that has previously been underserved. Financial advice can now be provided conveniently by a computer screen, something that was thought to appeal to the younger generation and their technology-based way of life.

However, a recent report conducted by Salesforce suggests this is not the case. The majority of people are still interested in face-to-face interactions with an advisor. There remains a clear desire to have a personable advisor, someone to ask questions, express financial concerns and trust their assets with.

A half-human, half-tech advisor is needed. Some robo-advisor platforms are now including options to interact with a human, and marketing themselves as having the best of both worlds – savvy technology, and a friendly human advisor. After all, a human advisor can do something a robot has not yet learnt how to do – they can provide emotional support and behavioural coaching. With this combination, automated financial services have the ability to positive affect the mass affluent sector.

But for High Net Worth (HNW), Ultra High Earners and Institutional Investors, robo-advisors are unlikely to change much. These individuals are willing and able to pay the higher fees for traditional wealth management, offering them complex, tailored advice that current robo-advisors are not capable of. In a recent FinTech survey by the CFA Institute, 80% of respondents (who are CFA charter holders) thought that robo-advisors would have either no or a negative effect on Ultra High Earners, with 60% thinking the same for HNW investors.

Overall, robo-advice has expanded the customer base for financial advice. Reduced costs and improved market access has increased competition between companies, providing more choice for customers and enabling them to select the best deal. With demand still remaining for human advisors, full-service advisors are using robo-advice to help serve smaller accounts and increase advisor productivity. For now, it seems, robots and humans can work together peacefully. The next threat will come from emotionally-enabled AI.

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Report on Jobs: South (ex London) – March 2016

Key points from February survey:

  • Slower demand growth and less marked drop in supply of permanent candidates…
  • …results in weakest rise in salaries for new starters since October 2014
  • Growth in temp billings remains relatively subdued

Staff Appointment:  Growth of permanent placements remains below 2015 trend

Recruitment agencies in the South of England reported a further rise in full-time appointments in February. The rate of growth remained above the long-run survey average, and was strong overall. That said, it remained slower than the trend pace set in 2015.

Staff Availability:  Drop in supply of permanent candidates slows

The availability of labour for permanent roles in the South fell for the thirty-second consecutive month in February. The pace of decline remained strong overall, and was faster than the UK average. That said, it was the slowest since January 2015 and the second-weakest in over two years.

Pay Pressures:  Permanent salaries

Recruitment agencies in the South reported a further marked rise in salaries awarded to new permanent staff in February.  The rate of inflation remained stronger than the long-run survey average, but slowed for the third successive month to the weakest since October 2014.

Regional Comparisons: 

Staff appointments

February saw a further broad-based increase in permanent staff appointments in the UK, as all four monitored regions posted growth. Moreover, rates of expansion accelerated in all cases. The strongest upturn was, once again, seen in the Midlands and the weakest in London.

Candidate availability

Permanent candidate numbers fell across the four monitored English regions in February, the thirty-second successive month in which this has been the case. The quickest rate of deterioration was noted in the Midlands and the slowest, although still sharp, in London.

Pay Pressures

Permanent salaries in the UK rose for the forty-sixth straight month in February, with increases seen in all four surveyed regions. The strongest rate of salary inflation was recorded in the North, and the slowest in London.


This blog has been written with thanks to The Report on Jobs, a monthly publication produced by Markit and sponsored by the Recruitment and Employment Confederation.

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Report on Jobs – March 2016

Key points from the February survey:

  • Permanent placements increase at quickest pace in three months
  • Permanent salaries rise at stronger rate but temp pay growth eases

Commenting on the latest survey results, REC chief executive Kevin Green, said:

“The UK labour market is at a critical juncture. Permanent hiring improved last month, demand for staff remains strong, and pay is going in the right direction – but serious threats are looming just around the corner.

“Next week the Chancellor will announce his plans for the coming financial year, at a time when recruiters across the country are reporting serious skills shortages alongside buoyant jobs growth. Now is not the time to put up additional hurdles that could throw the jobs-rich recovery off course.

“The introduction of the National Living Wage on April 1st, closely followed by tax changes on April 6th, will disrupt hiring strategies for many businesses. Employers will seek to offset rising wage bills, for example by scaling back recruitment and increasing automation. This could weaken future demand for staff.

“In June, the EU referendum carries a very real risk that business confidence will be curtailed and investment in hiring could falter. It’s vital that we have an informed debate about the impact the referendum might have on jobs, both in the short and long term. All parties must remember that UK employers need access to the global labour market in order to thrive.

“Global economic headwinds only add to the uncertainty around what the months ahead hold, and the Recruitment and Employment Confederation calls on the government to avoid further destabilising the UK jobs market in next week’s Budget.”

Permanent placements growth at three-month high:

February data pointed to a further increase in permanent staff placements. The rate of expansion quickened slightly, reaching a three-month high.

Stronger rise in demand for staff:

The level of available job vacancies continued to rise in February. The rate of growth was marked and the fastest in six months. Demand for permanent staff continued to show a stronger trend than that for temps.

Slower fall in candidate availability:

The availability of staff for both permanent and temporary/contract roles continued to decline in February. However, rates of decline eased in each case to the slowest in at least two years.

Sharper increase in permanent salaries:

Starting salaries for successful permanent candidates rose at the fastest pace in three months during February. However, temp pay growth eased, hitting a 33-month low.

Employment rate and vacancies hit record highs:

The UK employment rate and number of job vacancies have risen to record highs, according to latest data from the Office for National Statistics (ONS).

At 74.1%, the employment rate is highest since comparable records began back in 1971. The number of employed now stands at 31.42 million, also a record.

There were 776,000 unfilled job vacancies in the three months to January, the highest since the series began in 2001. With only 1.69 million people unemployed, the jobless to vacancy ratio is the lowest for a decade.

The growth in employment was driven by rises in both employees and the self-employed, while 88,000 of the increase was attributable to previously inactive people returning to the labour market.


 This blog has been written with thanks to The Report on Jobs, a monthly publication produced by Markit and sponsored by the Recruitment and Employment Confederation.


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Pension Plan Pay Warning



Just one in ten self-employed workers paid into a personal pension plan in 2013/14, according to an analysis by pension firm Prudential of the most recent data made available by HM Revenue & Customs (HMRC) and the Office for National Statistics.


This is a sharp drop on the 2001/02 figure of 34 per cent.  In that year, 1.1m self-employed workers made pension payments and the total value of their contributions was £2.5b.  Twelve years on, only 420,000 self-employed workers were making pension payments, and the total value of contributions was only £1.6b.  This is despite the fact that the number of self-employed workers is at a record high of 4.6m, and leaves more than 4m workers without adequate arrangements for their retirement.


A 2014 survey, also by Prudential, indicated that the main reason for failing to contribute to a pension plan is affordability.  More than half (57 per cent) of self-employed workers either don‘t have enough money or put other financial priorities ahead of pensions, with 9 per cent preferring to plough any spare case back into the business.


With thanks to The Voice magazine, March/April 2016

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What Do Staff Want From You?

What better way to let people know they are expendable commodities than calling them ”resources” (human or otherwise)?


We all know what we want from our people; the question is how to get it consistently.  The answer, more often than not, lies in understanding what your people want from you.

Remuneration, incentives, reward and opportunity are important tools in achieving a “happy advisory family”.  However, if we accept getting the most from your staff is really about delivering a knock-your-socks-off service for your clients, it has to go further than a general sense of wellbeing.

Most advisers, according to the MD of So Here’s the Plan, agree team dynamics have changed dramatically in recent years.  In the past, the most important person in the business was the salesperson.

Today, service staff are arguably the fulcrum because service is precisely what advisers are selling.  The quality of your business will be reflected in the quality of the clients you can keep, not the volume you can attract.

A truly successful advisory business ensures its purpose permeates every corner of the firm and there is both the leadership to inspire it and the infrastructure to deliver it.

But it starts before the beginning.  Advisers agree not enough work is done to ensure the right people are brought in for the right roles:  that those in client-facing roles care deeply about people, that staff in support roles love administrating and leaders are just that.

Incentivisation and reward structures, however wonderfully conceived, will fail unless the people fit.  Four, interlocking, themes dominate:

Leadership:  The desired culture must be purposefully led from the top and not be expected to come through advisers.  Someone needs to invest time in creating the infrastructure for that to happen.

Infrastructure:  Designing your processes to reflect the kind of service you intend to offer clients is key.  How much should advisers be involved in administration?  Should support staff be liaising directly with clients?

Clarity:  Responsibility can only effectively be taken when clarity is provided as to what is expected from individuals and teams.

The client experience:  All the above must be designed and delivered with the client as the start, the middle and the end.  Every part of the business must know how it fits into the client’s world – not the other way round.


Article from Money Marketing – 3 March 2016

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Will you have to work until you’re 75 or older to claim state pension?

Government review will examine whether pension age should continue to be linked to life expectancy.

State Pension

Speculation is rife that a new review of retirement age will lead to workers joining the workforce now not receiving their state pension until at least their mid-70s.

The study, which will report to the government next May, will be headed by John Cridland, the former CBI boss. It’s a scheduled assessment due to be carried out every five years to ensure the state pension remains affordable and keeps up with demographic changes.  However, it’s the terms of reference for the review that has got people in a lather.

The government said it would consider changes in life expectancy, as well as wider changes in society, and “make sure that the state pension is sustainable and affordable for future generations”. It will also consider whether “the current system of a universal state pension age” rising in line with life expectancy was “optimal in the long run”.

Both the BBC and the Daily Telegraph, informed by comments from Tom McPhail, head at pensions research at Hargreaves Lansdown, said this “suggests the review will look at whether the retirement age should rise even if life expectancy slows”.   McPhail added: “We fully expect state pension ages to go up faster than currently planned and those joining the workforce today are likely to find themselves waiting until their mid-70s to get a payout from the state system.”

There is also the opportunity, however, for the scrapping of a universal state pension age to allow for more local and sector-specific ages to be set and counter criticism that many blue-collar workers in particular will simply be unable to continuing working into their 70s.

The Telegraph said the review “raises the possibility that manual workers in some areas might be allowed to claim their pension earlier than those who have spent their working lives in offices in other places”.

At the moment, the state pension age is 65 for men and 60 for women, with a single age of 66 coming in for both sexes from 2020. It will rise to 68 between 2026 and 2028 – and this review will look at what to do from then on, when the government had previously stated it would be set according to changes in average life expectancy.

A report published recently by pension provider Royal London suggests the average UK person joining the workforce now could have to work until they are 81 to have the same standard of living as enjoyed by the current retirement generation.

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Tasting the Freedoms:  savers have spent the money or held it in cash

The Pensions and Lifetime Savings Association has published its latest wave of research on patterns in retirement following the reforms.

Of those adults aged 55-70 surveyed, the majority, 63%, had started to look at how they would take their pension, and 23 per cent had done nothing.

Of those that accessed their pension, 18 percent spent it all and 19 per cent saved or invested their pension pot.  Of those who saved their pension, 23 per cent put it into a savings account and a further 20 per cent paid their pension into a cash ISA.

The Numbers:


Proportion of savers who have accessed their pension pot who have spent it all


Proportion of those who paid for advice on withdrawing money from their pension


Proportion of those who are weighing up how to access their pension who plan to go to their provider




Information taken from an article in Money Marketing Magazine 4th February 2016


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The Week in Numbers – 4th February 2016


15% – Proportion of Ucits funds that could be “closet trackers”, according to the European Securities and Markets Authority

20% – Rise in revenue reported by Mattioli Woods following a spate of acquisitions

30 – Number of sales roles being cut by Aegon as part of a shift towards its platform business

£600m – Value of build-to-rent deal entered into by Legal & General with Dutch asset manager PGGM.  The rental income from the properties will be used to pay annuities

124,803 – Total Mortgage approvals in December, representing a 21 per cent year-on-year increase, according to figures from the Bank of England

£700m – Bid reportedly made by Tilney Bestinvest for wealth management firm Towry

3,205 – Total number of Pension Wise appointments in December, down from a high of 6,755 in October, according to official Government statistics

£516 – Average cost per Pension Wise guidance session in December, up 4.2 per cent compared with the previous month


Quote of the week: “Unless we get a warts-and-all announcement at the Budget, free of headline-grabbing spin, the Government will not achieve the incentive to save” – Dentons Pensions’ Martin Tilley on Treasury plans to overhaul the pension tax system


Originally published in Money Marketing Magazine 4th February 2016

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