The Challenge of Replacing Human Advisers

Traditionally, personal chemistry has been seen as the most important factor when selecting a financial adviser. Even when part of a larger institution, trust in a specific individual drives long-term relationships. This raises a crucial question: how can robo-advisers, which replace human interactions with algorithms, possibly compete?

The common assumption is that a human relationship builds trust. However, we believe that a well-designed digital financial advice platform can provide an experience that is even more intimate and trustworthy than traditional face-to-face advice.

Informed Self-Selection: A New Model for Advice

For robo-advice to be truly transformational, it must redefine the role of the adviser. The goal should not be to replace one type of agent with another but to eliminate dependency altogether, allowing individuals to make informed decisions for themselves.

Why This Matters

• Traditional financial advice often makes clients passive participants, dependent on the adviser’s expertise.
• This reduces engagement, weakens personal responsibility, and increases vulnerability to biased recommendations.
• A digital approach should educate, enable, and empower clients to take full ownership of their decisions.

This model ensures that rather than asking an adviser, “What would you do if you were me?”, the investor can instead ask, “What should I do, armed with the same knowledge and insights an adviser would have?”

The role of technology is to provide this knowledge, using a powerful decision-making engine that offers clear, consistent, and logic-driven guidance—without an agenda.

How Robo-Advisers Can Replace Human Functions

1. Building Trust Without Chemistry

Human advisers rely on personal chemistry to encourage clients to share personal details. However, many people are naturally reserved and may feel more comfortable providing financial information privately through an intuitive digital platform.

A well-designed user interface can make this process even more engaging than a face-to-face conversation by:
✔ Motivating the client to input more accurate financial details.
✔ Providing instant feedback, making the experience interactive and rewarding.
✔ Creating a personalised journey, rather than a generic questionnaire.

2. Providing Structure and Accountability

One of the biggest advantages of having a financial adviser is that they provide:
✔ Order—Ensuring that financial affairs are structured properly.
✔ Accountability—Helping clients follow through on commitments like saving regularly.
✔ Discipline—Preventing emotional reactions that lead to poor financial decisions.

However, all of these functions can be performed more reliably by technology. Robo-advisers can:

• Send automated reminders and alerts to encourage saving.
• Provide real-time calculations to show the impact of financial decisions.
• Apply quantitative investment models that remove emotional bias.

3. Improving the Accuracy of Financial Planning

Human advisers interpret and interpolate financial preferences based on client conversations. However, this process is highly subjective, leading to errors and inconsistencies.

In contrast, a well-designed robo-adviser captures preferences directly through an interactive process that:
✔ Reveals real-time trade-offs (e.g., risk vs. return, early retirement vs. higher savings).
✔ Eliminates adviser bias—The digital model has no self-interest in the client’s choices.
✔ Creates an audit trail—Recording how decisions were made, reducing compliance risks.

4. Demonstrating Transparency and Objectivity

Traditional advisers often have conflicts of interest, such as commission-based earnings or incentives to sell certain products.

A robo-adviser can be programmed to be completely objective, ensuring that:
✔ Every recommendation is unbiased, even if the advice is not to invest at all.
✔ It never pushes a product or service based on the provider’s financial interests.
✔ It delivers consistent answers, regardless of potential revenue for the firm.