The way that people receive financial advice may be about to change forever, as the Financial Conduct Authority is allowing firms to test robo-advisors.
This information was recently released in a report from the Financial Conduct Authority, and it revealed that financial firms have been able to apply to do robo-testing from June 2016.
This allows the companies to test innovative robo-programs that could make it easier and cheaper to provide financial services to the public.
The applications seem to be coming in fast, as ‘a number of firms’ are already testing the models in a real-life environment.
The Financial Conduct Authority is happy with the success, as they believe that robo-services are a valuable tool that can assist people who struggle to pay for professional financial advice. This could help to improve many people’s finances across the UK, reducing debt and helping to promote sound financial knowledge.
One of the main fears that is likely to rise from the popularisation of robo-advisors is the chance of inaccurate advice being given that could ruin someone’s finances, but it appears that the FCA has already considered this outcome and thoroughly planned for it.
They released a report about the risks, starting that the firms need to build additional safeguards to prevent this from happening. The companies won’t be able to begin testing until the FCA have confirmation of the safeguarding, helping to prevent any rogue robo-advisors.
If any issues arise, the FCA stated that the financial company will need to make amendments to the algorithm controlling the program.
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What Does This Mean for the Future of Financial Advice?
For the last few decades, financial advice has been viewed as a luxury rather than a right – something that is only available to the rich and privileged. Robo-advisors can help to make financial advice more accessible to everyone, including thousands of people who are in a bad financial state and can’t reach out to anyone for help or advice.
This could even have positive repercussions for the British economy, as the majority of the population will be able to access good professional financial advice if they decide that they want to.