A man shakes hands with a humanoid robot during the International Conference on Humanoid Robots in Madrid...A man shakes hands with a humanoid robot during the International Conference on Humanoid Robots in Madrid November 19, 2014.  REUTERS/Andrea Comas (SPAIN - Tags: SCIENCE TECHNOLOGY) - RTR4ER01

The robots are marching towards the wealth management industry, but perhaps more slowly than originally billed.

Online “discretionary direct” investment services, also known as “robo advisers”, began launching in 2012, promising to disrupt traditional models through technology. Three years later, the biggest companies such as Nutmeg and Money on Toast will still not reveal what level of assets they manage, but do not appear to have dented the business models of established wealth managers and fund supermarkets.

On the other hand, a host of well-known brands — including Investec Wealth, Brewin Dolphin and Barclays Stockbrokers — plan to launch similar robo services this year, while Hargreaves Lansdown, the biggest direct-to-consumer fund shop, this month launched its own Portfolio+ service.

“It’s going to be a slow burn, and I don’t think the big brands are going to allow the little guys to run away with it. But a lot of people in the market are now taking this more seriously,” says Jeremy Fawcett, head of direct at Platforum, a consultancy.

Traditional models maintained a distinction between advice, delivered by a human being, or discretionary management, in which the human manages investments on customers’ behalf, and direct-to-consumer product sales, where customers make their own decisions.

But these newer services tread a middle path, generally by offering portfolios aimed at different risk appetites, combined with simplified advice or “guidance”.

By doing this, they can sometimes cut costs. Money on Toast, for example, boasts of cutting out layers of percentage charges associated with advice, investment platforms and discretionary management.

A slick but simple online interface is also key, although most operators in this space dislike the “robo” label.

In the US, online services like Betterment and WealthFront have converged around a similar model: algorithm-driven, low-cost, with passive portfolios of exchange traded funds. But in the UK, the picture is more complicated.

“You’ve got Hargreaves Lansdown, which has been very successful with the investment supermarket approach; you’ve got Nutmeg with a direct discretionary offering; you’ve got Money on Toast and Wealth Horizon offering advice or simplified advice. There is also the growth of investment ‘solution’ type products,” said Mr Fawcett.

“There are quite a lot of different ways you can address this need.”

Mark Polson, founder of The Lang Cat, a consultancy, argues that online portfolio services may not have fully established what need they seek to address.

People with under £30,000 to invest may struggle to pay for advice under regulations introduced in 2013 banning payment through commissions, yet there has not so far been a mass movement of these people to “robo” services.

“The fact that someone can’t afford an independent financial adviser doesn’t necessarily mean that what they want is robo advice,” says Mr Polson.

“Also, going down the robo route is not always particularly cheap for the investor. The total cost of ownership is often well over one per cent.”

Then there is the question of reputation, in which established companies may have an advantage.

A report by Numis Securities in May said robo-advisers were unlikely to substantially affect the £1.1tn UK wealth management market in the next five years. But Numis pointed out that Hargreaves Lansdown, once an upstart challenger, has risen over three decades to command significant market share in its sector.

Nick Hungerford, chief executive of Nutmeg, argues that as soon as one of the “old-world brands” launches a digital offering, the rest will follow.

“They couldn’t risk missing out. This will be fantastic for customers,” he says.

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