Just recently, leading High Street bank HSBC issued an announcement saying that they are planning to launch a new service, offering investment advice online, by the end of 2017. What little detail they have released thus far, describes the new service as cheap wealth management initiative aimed at savers who only have a modest sum of cash to invest.
New HSBC robo advisor service will be based on financial data and special algorithms
Further detail on the new service is still somewhat sketch at this stage, but what we do know is that the new service will utilise data and special algorithms designed to provide a tailored advice package, which will matched to an individual person’s specific circumstances. In other words, HSBC will be entering the realm of the robo advisor.
Customers, who are interested in the new offering when it is launched, will be invited to input data online about their financial circumstances. The new service will then analyse the data they have submitted, and it will then suggest a particular investment portfolio that matches the profile they have supplied.
New robo advisor service still in development
At this point in time, this new product has not been given a name. It is still in the early development stage, but whatever it is christened, the service HSBC will offer will be that of a robo advisor. Robo advisement in general, is still a relatively new product, and HSBC are currently conversing with the Financial Services Authority, to determine exactly what it is they can and can’t do.
The robo advisor phenomenon is an increasingly popular sector within the Fintech industry. Up until now it something that has been offered mostly by wealth management companies like Scalable Capital. However, several large banks have already made incursions into this new marketplace including the likes of UBS with SmartWealth whicjh already live, and NatWest, who are scheduled to launch NatWest Invest, also planned later on this year, like the new HSBC robo advisor offering.
Bridging the “advice gap”
The take-up of robo advisor offers are supported morally by both the banks and the financial regulators, because they see them as bridging what is referred to as the “advice gap.” This is partly a recognition of the fact that face-to-face advice from traditional wealth management companies, tends to be quite expensive. This is okay for wealthy investors, but leaves smaller investors, who only have modest amounts of money to save, without professional advice. This is where a robo advisor is seen as being a helpful medium.
Aimed at the smaller investor
HSBC state that its new product will bring forth wealth management opportunities to those who previously thought they couldn’t afford it, thanks to low cost automatically generated advice.
According to a statement issued on the 1st June by a spokesperson for HSBC, the bank is excited about their new robo advisor role. They are consulting with their customers and the FCA to format the new service and to make sure that they will be offering the latest cutting-edge, smart, wealth management technology.
Many Europeans are sceptical about fully automated saving
However, on a more sober note, a recent survey of 15,000 Europeans, carried out by ING (the Dutch banking giant) across 15 EU member states, concluded that 91% of people were not comfortable with letting a robo advisor make unilateral decisions about their personal money. 36% of people said they would not use fully automated financial activities.
One of the fears most commonly voiced is that of cyber crime. It is something that has been brought to the fore recently here in the UK with the cyber attack on the NHS computer network.
Robo advisor plus, offering
With this sort of reticence in mind, one leading wealth management firm here in the UK, Moneyfarm, offers a robo-advisor service with a difference. Rather than investors having to put their entire trust in a fully automated service, Moneyfarm offers additional expert human advice too. It’s a robo-advisor service with a difference, and one which many investors will value.