Robo-advice – “Unexpected Mortgage in the bagging area.”

02 October 2019

By Matthew Davey, Senior Financial Adviser


I’m regularly seeing articles appear about robo-advisers entering the mortgage advice market as a mortgage advice platform. After an article was shared by a colleague this morning about a new online financial adviser entering the mortgage market next year, it made me think about what a robot can offer that an adviser cannot and vice versa. So, let’s take a closer look at the two options… 


What is robo-advice?

Robo-advice may not be as cool as it sounds, it’s not a man-made robot sat on the other side of a desk providing advice! It varies from model to model but from my understanding, the advice part of the process essentially consists of a website that allows you to key in your personal information, and as a result the ‘robot’ will generate a list of lenders for you to go through and compare before you move forward with an application. You will generally speak with a human advisor who will recommend a product once the available products have been generated, but you won’t have spoken to any at all until this point.

Sounds great! Nice and straight forward on the face of it, but in reality, due to the complexity of the ever-changing mortgage market, I’m concerned about the accuracy of the comparison data. Can a ‘formula' really advise you on YOUR circumstances? You are not a robot and you may be plugging in the same information as the person next door, but are your circumstances the same? You are unique, your financial advice should reflect this.


The benefits of using an adviser

There are many benefits to using a human adviser, and here are in my opinion the key benefits over using an automated/hybrid system: 



The mortgage market changes from day to day, lenders release new rates and change their lending criteria regularly. I appreciate we are living in a technologically advanced age but there are many cogs to the mortgage advising machine. I have full confidence that lenders rates will be up to date given all advisers use mortgage sourcing systems that are kept up to date, but will the ‘robo’ system always be completely up to date in terms of lending criteria? I certainly have my doubts.  


The personal touch

There is talk of fully automated processes being in place, however, robo-advice at this moment in time often works in a hybrid way in that you originally deal with an online system, you are then either given the option to or have to speak to an actual human adviser who will recommend you a product. Once a product has been recommended you will then proceed with the remainder of the online process yourself. You don’t have a relationship with the person providing the advice, they are purely there to be available to you once you have carried out the original assessment yourself. With there being so much on the line I would much prefer to deal with a person that I have been referred to, have an existing relationship with, have seen in person or have had an initial chat with from the outset and got ‘a feel for’, not a computer/chatbot originally before then being able to speak to an advisor. Buying a property in the majority of cases is the biggest financial decision a person will make. Naturally, as a result of this most customers from start to finish have a lot of questions, and they sometimes want in-depth explanations. An adviser can provide customers with accurate answers and a higher level of reassurance from start to finish. They are also able to hold the customer's hand as much as it is needed to guide them throughout the process. 



Advisers are qualified and have a high level of expertise. Finding a product for a customer very rarely consists of simply finding the cheapest mortgage rate available for a customer. It involves looking at a customer’s particular set of circumstances, sourcing through various products and lenders and identifying what type of product and lender is the best match for that customer. Each case is different and has different needs, this is where expertise and precision are essential.

In the same way that the self-service till wonders what's in the bagging area while the checkout assistant already knows, your financial adviser knows you and can anticipate and help you with any nuances of your case.


What does the future hold?

Robo advice is in its infancy and I still think we are a long way from having a fully automated system. In a heavily regulated world, a system would need to be flawless as every decision an adviser makes concerning a customer has to be backed up. 

Although I’m not an expert when it comes to designing a website or creating computer software, I am a consumer and use various software and web-based packages - all of which are prone to a mistake/error/fault.  Of course, there is also human error to take into account. However, most mistakes made by humans can be quickly and simply rectified.

You may be reading this article and thinking it is written with a level of bias, and naturally being a human adviser myself it is. I still believe the points raised are still very valid. The main point of a robo/hybrid advisory system is to save time but from what I have read the process gives the customer much more to do.I’m someone who loves technology but there are some things where dealing with a person simply works best, and I know I would much rather receive advice from an experienced professional over an automated/hybrid system when arranging what will likely be the largest financial commitment of my life.