Rise of the robo-human adviser hybrid

Stock market
Jonathan Taylor, Investec By Jonathan Taylor, Senior Investment Director, Investec Click & Invest

3 November 2016

Could a combination of human expertise and computer algorithms make it easier for you to invest your money?

When they first came to the public’s attention in 2008, robo-advisers promised a no-frills, easy to understand, online service aimed at investors with no time or desire to learn about the intricacies of investing.

For a relatively low cost, these services offered passive investments, managed and monitored by computer algorithms.

Kick-started initially by a number of smaller fintechs, robo-advisers gained momentum quickly and led to a proliferation of platforms that have continued to drive down the cost of investing and reduce minimum contributions.

However, behind the excitement generated by these new online services, there was always a nagging sense of something missing - the human touch.

So, responding directly to client concerns, the services have started to evolve and we are beginning to see the start of a new phase of innovation with the rise of the robo-human hybrid adviser.

It’s this new breed of discretionary portfolio management that is now getting everyone’s attention as it promises the best of both words – a low cost, easy to understand online investment service managed and supported by experienced experts.

So, how will this benefit inexperienced investors?

The human touch 

The software behind robo-adviser websites is nothing new, the algorithms have been used in some shape or form by IFAs and wealth managers for years.

In the wake of the financial crisis, robo-advisers were seen as either the perfect answer to a disenfranchised world growing increasingly fed-up with complicated fees or yet another back-step towards depersonalised wealth management, depending on which side of the fence you were sitting.

Supporters of robo-advisers have always argued that this type of software benefits from the efficiency of automation, as it inevitably comes without the drawbacks of human ‘cognitive biases’. On the other hand, those against the idea suggest an online interface will never inspire confidence in a first-time investor and will not be able to deliver a nuanced understanding of a client’s risk appetite.

Meanwhile scientific evidence has continued to build up, supporting the value of human experience over binary algorithms. In September this year, researchers from the universities of Cambridge and Sussex found that traders who were in tune with their gut instinct or ‘interoceptive sense’ were likely to outperform computer algorithms. It seems there are some things that even the smartest computers just miss.

With this in mind, could a combination of human expertise and unbiased automated intelligence be an effective solution for investors eager to put their money in safe hands but not able to afford the cost of a wealth manager?

This effectively is what we set out to achieve at Investec, with the development of our new discretionary service, Click & Invest. We have designed an online service with transparent fees, available for individuals with £10,000 or more to invest but behind the scenes we have a team of investment managers and over 180 years of experience informing our decisions.

By developing an easy to understand website that defines a portfolio based on an individual’s unique risk requirements, actively managed by a group of specialists and supported by a customer service team, Investec have responded directly to our client’s concerns about robo-advisors and remain at the forefront of client-centred wealth investment.

To be one of the first to experience Click & Invest, stay up-to-date with our upcoming launch.

About the author

Jonathan is the Senior Investment Director for Investec Click & Invest. Jonathan has over ten years of experience in wealth and investment management. A Chartered Fellow of the Chartered Institute for Securities & Investment (Chartered FCSI), Jonathan specialises in managing investment portfolios for people who are under the control of the Court of Protection or who have a Personal Injury Trust.

About the company

Click & Invest is part of Investec Wealth & Investment, who are wealth management experts that have been successfully looking after clients’ money for over 180 years – giving you access to experienced Investment Managers and an in-house Research Team.

This blog is one of a series of articles from our commercial partners.
The views expressed are those of the author and not necessarily those of ICAS.


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