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How AI holds the key to a robo-advisory reboot

Hannah Hilali
Series of screens showing a wealth management journey

Can GenAI revive robo-advising?

“Robo-advice” is a clichéd and overused term that has received a fair share of criticism in the past. 

The first robo-advice proposition was launched in the UK in 2011, more than a decade ago, but it was back in 2016 and 2017 when robo-advising hit the pinnacle of the hype cycle. During that time, a mass of digital wealth robo-advisor offerings hit the market promising to democratise access to wealth management services for the mass market—who don’t qualify for traditional wealth management services. 

But the robo-advice experience was disappointing and the hype short-lived. By 2019, 1 in 4 robo-advisors had shuttered, including robo-advisors launched by big names like UBS, Investec, and ABN Amro.

Then, during the pandemic, there was an explosion in retail investing as many hunkered down and took up trading from their armchairs. As we navigate the post-pandemic environment, we find ourselves in what’s been described as a 'once-in-a-career upheaval’ for the wealth and investment industry:

  • Inflation, market volatility, and interest rates are huge concerns for investors and customers.
  • Customer demand is changing; demand for retail trading is down, demand for ETFs is up, as is a preference for ESG investments.
  • The transfer of wealth to a digital-first generation is happening.

What’s more, in November 2022, GenAI entered the public consciousness of the masses with the launch of OpenAI’s ChatGPT. 

There has been a lot of ink spilled already on what the possibilities and opportunities for GenAI are across different industries. When it comes to wealth and investments for the masses, I  believe that the adoption of GenAI is an inflection point for robo-advisor propositions - one that will see robo-advisors win new customers by feeling like a premium service, retain those customers by helping them to achieve their goals, and become sustainable by capturing a larger portion of customers investments.


Robo-advice propositions failed because they weren’t premium or personalised

Robo-advice 1.0 failed to deliver exceptional experiences for several reasons:

  • Lack of engaging experiences

Customers were usually asked to fill in a short survey and were given recommended investing profiles based on their risk profile. It was a basic experience and didn’t capture the complexities of people’s lives or goals. It also didn’t give people the ownership and flexibility that they wanted over their investments.

  • A desire for hyper-personalisation

The robo-advisor then invested your money for you and made trades based on your risk profile, but customers didn’t receive personalised communication or updates about why trades were made. The lack of insight into decisions caused distrust and uncertainty, firms failed to capture significant proportions of customers' investments which meant they failed to become sustainable. 

  • Technology wasn’t yet fit for purpose 

If there was a chatbot, it would be basic and unhelpful. Most chatbots could respond to customer service questions with predetermined texts based on specific triggers but could not give insight into investments. There was little in the way of customisation or a way for the robo-advisor to gain in-depth insight into customers’ needs or goals and adjust investments accordingly, beyond reissuing short surveys and adjusting risk profiles.


Could now be the time for a robo-advisor reboot?

The future of wealth and investments for the mass market lies at the intersection of:

  • Responsibly offering customers the products they want
  • Delivering financial outcomes that enable customers to achieve their goals
  • Providing an exceptional customer experience
  • Effectively leveraging the right technology to do all of the above at the appropriate touch points efficiently and at scale


Does GenAI have the potential to make robo-advising feel like a premium service?

Wealth management is all about feeling like you’re receiving a premium personalised service with real human interaction. Robo-advice felt like the opposite.

When people are making big decisions about their future—like their retirement or their children’s education—they want to feel like they’re having a personal human conversation, because these are the decisions that keep them up at night.

GenAI has the potential to make these tools feel more like authentic human interaction and enhance the capabilities of wealth managers and financial advisors in building deeper relationships—if it’s done in the right way.

But there is still a need for human advice in the mass market.

People want different levels of human interaction and automated advice at different points in their life. Each customer is unique, the key to getting it right is dialling up the human touch at the right moments in time. 


Let's look at how that could work:

  1. Customer onboards to the app in a few simple steps using e-KYC. 

  2. Customers have a natural, conversational experience with an AI agent - instead of a static survey - and get an intelligent personalised financial plan and investment strategy, not just a basic risk profile.
Image of phone screen conversation with a robo-advisor

3. Customers are able to set up multiple goals within the app that take into consideration the different goals they have, the time horizons of each goal, the capacity for loss, and their investment preferences. 

Images of phone screen showing Sarah's portfolio

4. Customers receive an easy-to-understand personalised investment update periodically as well as every time a trade is made, enabled by GenAI. Transparency on the performance of investments and the reasoning behind investment decisions increases trust in the robo-advice proposition.

5. Depending on a customer’s goals or changing life plans, they might choose to continue with their plan or speak to a human advisor. Human interaction is available at the click of a button.

Phone screens showing financial advisor interaction

6. That human advisor already has insight into the customer’s goals and challenges, as the AI has automatically constructed a summary for the advisor to provide context and can help the advisor to identify the next best action for the customer. This makes the advisor more efficient at their job and increases time for the things that really matter—building connections and trust with their customers.

By taking a hybrid approach, customers get the best of personalised, intelligent digital experiences coupled with the option for human support when they need it. This connected, customisable experience builds trust and increases the amount of money customers invest—ultimately leading to increased profitability for the robo-advice platform.


How to get started

We can help you reboot your robo-advice proposition and win back disappointed customers:

  • Align your stakeholders - We’re committed to proof of concepts, but for them to be strategically accepted, we need the business engaged. Smart Start is our branded workshop built to align executives and decision makers over two half days.

  • Accelerate your robo-advice reboot - We’ll take you from art of the possible to POC, roadmap, and business case in 6 - 8 weeks.

  • Get the foundations right - We’ll help you get the basics right and build the data foundations needed to unlock the robo-advisor growth opportunity, while accelerating time to market through scalable cloud infrastructure and automation.

How can we make it happen for you?

Get in touch

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