23rd January 2016 at 1:00pm
Did you know, according to the financial website unbiased.co.uk, the second Monday in January is by far the most popular day of the year for people to seek money advice?
While traditionally this might be the domain of the face to face adviser, it’s looking like many of us who are seeking some financial guidance might now favour some online guidance instead, according to a recent study.
It should really come as no big surprise, as people of all ages are using the internet and their mobile tech more and more for everything, and that includes many financial services. So it’s understandable that when looking for advice, consumers will be tempted to follow a digital route too.
Cost also plays its part, as many are reluctant to pay the fees charged by some specialists, especially when they feel with a little help off the internet they could go it alone.
A matter of trust
However their reasons are not just purely down to cost and accessibility, trust seems to play a big factor too. A study has found that a third of people see their bank managers as being similar to “used car salesmen”.
According to research by consumer finance site MoneyMagpie.com, an increasing number of Brits rely on YouTube rather than their bank manager for impartial financial advice. Almost half of people surveyed now depend on the video sharing website for independent guidance about taxes, investments and other personal finance matters.
With others seeking peer to peer guidance from strangers in forums and from social media networks which are considered more “trustworthy” sources than in-branch professionals.
And almost all of those questioned agreed that the internet is a helpful resource and it is fuelling a nation of money-savvy ‘DIY financers’.
While it’s encouraging that the internet is providing fast, free and favoured ways to access financial information and creating this new breed of DIY financer – is it really safest way to manage your finances?
Care in the community
The internet is a weird and wonderful place, full of fact and figment. However the difficulty can be splitting the wheat from the chaff. And with much of its content unsolicited, by going down this route, especially with something as important as your financial future, it can open you up to the danger of receiving unqualified advice or becoming the victim of online scamming.
A qualified opinion
With separate research by investment company Nutmeg saying two-thirds of investors would be happy to rely on web-based advice, as long as the right tools are available –there is a market for financial institutions and advisors to find creative ways to engage with consumers, and pass on much that needed “qualified” advice.
As a direct result of this fresh demand, the financial sector is in the midst of an ongoing digital revolution, which has seen an explosion in online services promising to bring cheap and easy financial management to the masses. We’re also beginning to see the rise of what is being termed as “robo-advice”.
Rise of the machines
Billed as an algorithm-based way of providing mass-market advice, financial or not, to customers – robo-advice is given on the basis that tools will gather your personal data, often through some sort of online survey.
By establishing some key information such as your approach to investments, your attitude to risk and your capacity for loss, they will then be able to return useful suggestions or recommendations that may work for you.
What’s reassuring with this new direction is that most robo-advisers give regulated advice, which means anyone using them has recourse to the Financial Ombudsman Service if things go horribly wrong.
But it’s worth noting the guidance given by these sites will not come free and they will all have their own individual charging structures.
Careful decision making
There will always be a place for financial advisers, particularly for those with complex financial affairs. For those of us with simpler needs, the internet can be a good place to start, however consumers should select their go-to experts carefully, look for financially regulated sites where possible and avoid making any important financial decision without double-checking with other sources, too.
The information in this blog or any response to comments should not be regarded as financial advice.