Survey highlights support for robo advice; need for improved financial education and engagement

Survey highlights support for robo advice; need for improved financial education and engagement

A recent HSBC survey of 8,000 adults with savings of at least £15,000 found that almost half (49%) do not see the value in seeking professional investment advice for sums under £25,000, with almost half saying they would look for guidance online – either becoming a DIY investor or seeking robo advice.

Whilst this may be good news for the DIY investing and robo advice (Do It For Me) platforms, the study also revealed that one in five savers would not invest because they believe they lack sufficient knowledge or don’t have the confidence to know where to start.

Robo advisors are becoming increasingly popular with those with modest savings looking for a simple and cost-effective way of establishing an investment portfolio, without incurring the cost of traditional financial advice.

The robo ‘advice’ is an instantly diversified portfolio of investments, delivered and managed on a discretionary basis to reflect an investor’s risk tolerance and overall financial objectives; many have very modest minimum levels of investment.

Despite having savings of £15,000 or more, 56% of respondents said they had never received professional financial advice; 28% said they would trust investment advice from friends and family, although that is lower than the 35% that said they would trust what they read in the media.

a simple and cost-effective way of establishing an investment portfolio

DIY investing platforms such as the online stockbrokers have been around for almost twenty years now and became increasingly popular when the government’s Retail Distribution Review changed the way in which financial advisors could charge for their services – more

These ‘execution only’ platforms increasingly offer a third way for those not wishing to make individual investment decisions; ‘Do It With Me’ allows a investor to make regular or ad hoc contributions into model portfolios that are constructed according to particular risk profiles and investment objectives.

With Nutmeg first out of the blocks in 2012 there are now an increasing number of automated investment platforms – robo advisors – offering a range of subtly different propositions, meaning there should be one that matches your required pricing model, functionality and underlying investment vehicle.

Initially looking to engage millennials in a quest to ‘democratise investment’ many of the start-ups tried to make themselves as accessible as possible to smaller investors – it would be difficult to limbo under Wealthify’s minimum investment of £1 – and serve up a risk assessed portfolio of low cost passive index tracking funds – ETFs.

However, a recent development has seen propositions such as UBS Smart Wealth and Investec Click and Invest marry slick online on-boarding with actively managed funds; lower minimum subscriptions are opening up traditional investment management to an audience previously excluded because they had too little to invest.

There is a big opportunity for robo advisors to attract a good share of sub £50,000 investments, particularly from those unwilling or unable to devote the time to becoming a DIY investor; their challenge is to persuade would-be customers of the benefits of investing over saving, to allay any fears and fill in any gaps in their financial knowledge.

financial self-determination will necessarily replace state provision

HSBC’s study comes three months after the bank revealed that it would be the latest to join the robo advice party by offering a personalised low-cost solution aimed at smaller investors – more

Michelle Andrews, head of UK Premier and Wealth Insights at HSBC told This is Money what those contemplating investments might consider before taking the plunge:

robo adviceDon’t be put off by the ‘wealth’ in wealth management; many people don’t consider themselves wealthy and even the term can put people off – you don’t need to be wealthy to put aside savings each month to invest.

robo adviceFind the type of advice that works for you; a lot of people don’t have time to consider wealth management, but investment advice doesn’t have to take hours and can be done online or over the phone.

robo adviceThink long-term; investment offers long-term returns but if you are likely to need instant access to your money your returns are likely to be reduced and your pot diminished.


With inflation now at a target-busting 2.9%, those sitting in cash are seeing the real value of their savings being eroded and now might be the time to consider constructing an investment portfolio.

There have never been so many options available for those deciding to start on the road to financial independence and information and education is readily available to support you on your journey.

The hardest step is usually the decision to engage in the first place, but if you subscribe to the belief that financial self-determination will necessarily replace state provision, then there is every incentive.

It is important to decide on a path that is right for you; constantly checking share prices on your mobile phone may suggest that DIY investing is not for you.

However, whether DIY, Do It With Me or Do It For Me, there will be one that is right for you; there are plenty of online questionnaires based upon behavioural finance and emotional responses to allow you to find the way that is right for you – just don’t do nothing!

Those with the luxury of a long investment horizon can take full benefit of the miracle of compound interest – and a little and often for long, could make a significant difference to those facing tuition fees, trying to get on the housing ladder or aspiring to a good standard of living in retirement; because ‘mony a mickle maks a muckle’.




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