A deputy chief economist working at the FCA said that robo-advice can be a ‘very good’ complement to human financial advice but won’t replace it.
According to FT Adviser, in a recent podcast Karen Croxson said that the area offers huge potential and could go a long way in helping to extend the benefits of financial advice.
She said, “Financial decisions are very important for all of us, but they’re very hard decisions and often they’re complex. We can all be quite challenged with financial literacy.
“We can all have our cognitive biases and limitations. So this is a difficult space for consumer decision making generally. It’s really interesting to think about an opportunity like algorithmic advice, particularly as we go forward and some of the costs of that continue to fall.”
Croxson highlighted research that the FCA had done in the area and said that more work is required to fully understand the nuances of the challenges and opportunities, but that she believes robo-advice offer great potential.
She continued, “There are only so many human financial advisers in the world, and there are a lot of people out there needing to take financial decisions.
“So, this is not necessarily a complete replacement for that, but many decisions are going unsupported in that sense, and this could be a relatively cheap, fast, maybe even 24/7 tool that could be available for consumers for some of their financial decision making.”
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