The simple answer would obviously be no. It seems absolutely absurd that some sort of computer programme would know enough about financial products to be able to select an appropriate solution for a client – like something out of science fiction. Or at least the science fiction that we financial types think about.
But is this so far-fetched?
Not really. Robo advice has been around for a few years in the investment industry, although it remains in its infancy for mortgage brokers. But what is robo advice, how is it being used and are there any dangers? We’ll explore this below…
What is robo advice?
Robo advice is something that has come into vogue lately, as has the use of artificial intelligence in any number of industries. In its essence, robo or digital advice is an interface that will allow a client or consumer to access some level of advice around their financial situation without actually having to speak with a mortgage adviser.
To be absolutely clear – we aren’t yet at a point where a robot would be able to fully advise you on a mortgage application end to end, there is still the need for a qualified mortgage professional will still need to speak with the applicants to confirm acceptance of the mortgage advice given from the “robot” adviser. The idea here is to use technology to streamline and enhance the current advice process, not to replace it.
How and when is it being used?
This isn’t massively wide spread yet, but there is enough talk about this that we can presume this is something the industry is moving towards. As we said above, something similar has been used around investments for a while – so this would appear to be a logical next step for automated advice.
There certainly is an appetite for it too, particularly with millennials. A recent report suggested that 40% of millennials would be happy to receive robo advice on a mortgage or another type of financial product. Whilst new tech can be immensely beneficial – there are other ways that first time buyers can get better tailored advice when looking to get onto the housing ladder.
Are there dangers with robo advice?
Obviously, there are some potential dangers with this – as there always are when new technologies are introduced to a market place. The Financial Times recently wrote about the lessons that mortgage brokers would need to learn from how investment firms have used automated advice.
One of the bigger risks identified by the FCA on automated advice by investment firms was finding some clients needing to identify themselves as vulnerable. Naturally this is problematic when a vital part of establishing mortgage suitability is ensuring that a particular product is affordable or appropriate for a client.
Now, what we want to stress here is that by no means are we trying to shy away from technology in the financial industries in general, and the mortgage industry in particular. We are keen to use modern marketing techniques, we use technology like video calls when its appropriate for the client. But that doesn’t mean that we’d go as far as having automated advice – and as we said above, it’s unlikely we would ever go that far.
It’s important for us to have a real conversation with our clients. We want to know that when we’re advising you that you’re fully informed and that any advice is tailored completely to you – and that you’re as informed as possible about the financial product in front of you.
So for us, the human touch and conversation is a vital part of our work. If this is what you want and expect from a mortgage broker, we’d love to see if we can help you.