What are the pros and cons of robo-advice for your workforce?

Amazon now has humans working side by side with robots in their fulfilment centres to increase speed and efficiency. Previously warehouse workers had to find the correct shelf, then the correct item on the shelf and then ship the item.

These robots zip around the warehouse pick up the goods and deliver them directly to the floor staff. This has massively increased the speed and efficiency of the whole operation. But how are robotics and AI being used to help in other aspects of the workplace such as the financial wellbeing of employees?

In a sign of growing financial strain, research conducted by Aviva has shown that low-income families had just £95 of savings outside of pensions this winter compared with £136 at the same time last year.

This is driving many employers towards taking action to help employees get their finances in order. It is for this reason that we are increasingly seeing the rise of the robo-adviser in the workplace. But what are the pros and cons of these services?

Pros of robo-advice

Financial advice has been shown to significantly improve people’s ability to save, with research produced by ILC-U showing that it can increase retirement pot values by between 16-21%.

The real value of financial advice is that it gives personalised recommendations and aims to answer the question, ‘can you just tell me what to do?’ It is for this reason that those with more limited financial knowledge find it easier to engage with than generic guidance as all of the technical details can be handled by someone with years of experience.

Robo-advice is giving employees access to financial advice who may never have engaged with a financial adviser before. It is more affordable than sitting down face-to-face with an adviser which can often cost thousands so rules out this service to those with only small amounts to invest.

This is also bringing an entirely new demographic of user to the market as this advice is being delivered through a variety of channels, be it on smartphones, via skype or even through chatbots. This ease of use means the convenience of advice is increased with people effectively having a session with an adviser on their bus journey home. This all adds up to improving the overall engagement in the program.

Cons of robo advice

Not all people are comfortable engaging with their finances online and would prefer to speak to someone face-to-face. Where this can be afforded it can provide a more comfortable setting for a conversation around someone’s finances. It is for this reason that many robo-advisers have adopted the hybrid model whereby the service is available offline and the person can speak to a human adviser if they get stuck or unsure at any point.

Another criticism of robo-advisers has been the lack of personalisation. This is a valid criticism and it is worth noting that not all robo-advisers are created equal. As a customer, you must do your research and look at relative costs and performance and check if the investment approach of the adviser is in line with your thinking.

Finally, the term robo-adviser can be very misleading. The majority of the big names that people will have heard of in this space are, in fact, not giving advice at all but simple guidance. If you engage with a robo-adviser that is giving fully regulated advice and feel something was not appropriate, you have the financial ombudsman as an avenue of recourse.

Robo-advisory services are gaining in popularity within the workplace as employers increasingly recognise that people need more help managing their finances be it debt or long-term retirement planning. These services can be both engaging and valued by employees and simple to implement for reward teams.

Phil Blows is a director at Wealth Wizards.

This article was provided by Wealth Wizards.