Wealth Wizards shows wealth managers how to digitise financial advice

The wealth management industry is under pressure. Profitability depends on scale, and in the United Kingdom there are more than 27,000 firms vying to advise clients on the management of their savings, from independents with a handful of clients to the wealth management arms of global asset managers and private banks. Clients are increasingly demanding, forcing their wealth managers to invest in technology to provide digital interfaces and reporting. They are also more sensitive to cost, and likely to opt for less lucrative passive investment strategies offered by the likes of Vanguard than the expensive active alternative.

New entrants such as Monzo and Revolut are tempting investors with free brokerage, while platforms are also offering simpler and cheaper alternatives. Yet there is widespread recognition of the value of well-informed advice, especially if it can be provided at a reasonable price. The answer to the conundrum obviously lies in technology. Which is where Wealth Wizards comes in. The firm, acquired recently by Royal London, enables wealth managers in the United Kingdom to offer financial advice to clients in a purely digital form, making it affordable and accessible to a much wider range of investors. Dominic Hobson, co-founder of Future of Finance, spoke to Simon Binney, Business Development Director at Wealth Wizards.

Questions that are being asked

1. The Wealth Wizards website cites a Aegon study of 2018 which says the lack of financial advice is causing enough financial stress for employees to cost UK employers £121 billion and 18 million lost working hours. Can the problem really be that large?

2. What financial needs (e.g. pensions, savings, insurance, mortgages, other forms of debt, and even consumer spending) are Wealth Wizards covering?

3. What explains why only a minority of UK citizens (4-6 million) out of 50 million receive financial advice (e. g. lack of interest on the part of advisers with high cost-income ratios, perceived by consumers as too expensive, lack of savings, reliance on banks etc.)?

4. In reality, what proportion of the 50 million is likely to pay for advice?

5. Wealth Wizards is a “financial advice technology company.” How does this differ from robo-advice?

6. Wealth Wizards uses a retro term (“expert systems”) as well as AI. How well do they work together?

7. Can automated advice only deal with simple financial needs and, if so, is it likely that it will evolve to support more complex needs in the future?

8. How do the costs of automated advice compare with the analogue alternative?

9. Is low cost enough – doesn’t advice, like any financial product, need to be sold as well?

10. How awkward is the tax treatment of investing and saving in complicating the provision of advice?

11. Wealth Wizards distinguishes between automated advice and guidance. How does this distinction work in practice with an automated service?

12. The Turo application is distributed mainly through financial advisers. Has it been a challenge to persuade advisers to use the technology?

13. How important are employers (especially as providers of pensions) as a distribution network (MyEva is offered as an employee benefit)?

14. How difficult is it for financial advisers and employers to implement Wealth Wizards technology – is it very disruptive and hard to integrate?

15. Who at a company is the main sponsor of Wealth Wizards – HR, finance or some other function?

16. Consumers can use the technology (Turo) directly. Do employers worry about that (as a potential liability) or do financial advisers feel threatened by it?

17. Can Wealth Wizards administer and manage large volumes of workplace pension schemes?

18. Providers of workplace pension schemes face mounting regulatory demands (the latest being ESG reporting). Can Wealth Wizards help employers comply with those demands?

19. In May this year Wealth Wizards was acquired by Royal London. Is being owned by a pensions and investment company consistent with providing independent advice (albeit in digital form)?

20. Has being acquired by Royal London complicated the Wealth Wizards sales and distribution strategy?

21. Why did Liverpool Victoria not take ownership of Wealth Wizards?

22. Can Wealth Wizards foresee a time when the need for human experts falls away completely?

23. How is the business of Wealth Wizards regulated?

24. Advice must be based on comprehensive and accurate data. How hard is it to obtain data from users and/or their advisers?

25. What is the commercial model of Wealth Wizards?

26. Where does Wealth Wizards see the financial advice market moving in the next few years and what is the firm doing to keep its own proposition in line with the changes it anticipates?

27. Is Wealth Wizards incorporating crypto-currencies, NFTs and security tokens in its planning for the future?

28. Wealth Wizards is now offering different automated services to advisers, consumers and employers. Has the firm ended up in a different place to the one the founders expected in 2009?

29. How does Wealth Wizards get around 27,000 independent financial advisers?