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RBS Cuts Hundreds of Jobs As FCA Approves 'Robo-Advisers' (thestack.com)

Posted by timothy on from the it-puts-the-money-in-the-basket dept.

An anonymous reader writes: Royal Bank of Scotland (RBS) has announced that it will be switching customer advice services over to automated 'robo-advisers' as it cuts 220 face-to-face positions. Given the green light from UK regulator, the Financial Conduct Authority (FCA) this week, the bank agreed that the move would lead to cheaper, more accessible financial advice. Those customers qualifying for personalised advice will now need to have at least £250,000 (approx. $350,000) to invest. Following the FCA's recommendations, it is expected that other UK banks will soon introduce similar 'robo' services.

16 of 78 comments (clear)

  1. It's about time we realize by iserlohn · · Score: 4, Insightful

    Blind allegiance to profit is causing society's downfall.

    --
    :. Ultimate Control Dedicated/VM Servers
    1. Re:It's about time we realize by Richard_at_work · · Score: 3, Informative

      This is very very little in difference to the current concept of quote engines in the insurance industry where the resulting quotations are classified as "non-advised", meaning there is no opportunity for them to be miss-sold as the entire onus is on the purchaser and not the seller to ensure that what they are buying is correct for them.

      In the UK the financial and insurance industry is heavily regulated, to the point where the authority will take something which has been deemed "acceptable activity" for many years and force the industry to refund premiums - the banks are currently in the tail end of refunding over £100Billion in Payment Protection Insurance premiums (and interest) because the FSA (now the FCA) suddenly deemed the way they were sold to be non-acceptable.

      So, RBS is just using standard rating systems to present standardised options for low capital investors on a non-advised basis.

  2. "Please repeat your statement" by NotDrWho · · Score: 2

    "Sorry, I didn't catch that last part. Please repeat it again or press 1 to end this call."

    "I'm out of work and me kids are STARVING!"

    --
    SJW's don't eliminate discrimination. They just expropriate it for themselves.
    1. Re:"Please repeat your statement" by AmiMoJo · · Score: 2

      The UK is often used as a testbed for new ultra low quality service, because we don't complain much. We will put up with all sorts of crap, making us a good proving ground for new customer service ideas because even if it sucks we don't actually go as far as taking our business elsewhere.

      --
      const int one = 65536; (Silvermoon, Texture.cs)
      SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
  3. How are they going to justify MER? by sinij · · Score: 2, Interesting

    Majority of people are financially illustrate, or at least that how banks justified loot-and-pillage MER (management expense ratio) for most consumer-facing mutual funds. Now that they are switching to robo-advisers, how are they going to justify charging that?

    1. Re:How are they going to justify MER? by __aaclcg7560 · · Score: 5, Funny

      Majority of people are financially illustrate [...]

      I'm sure the new robo advisors will provide crayons for customers to draw pictures while their pockets are picked clean.

    2. Re:How are they going to justify MER? by scamper_22 · · Score: 2

      Most are switching to lower cost MERs anyways. I know I switched a long time ago to ETFs for pretty much this reason.
      The thing is the lower-level advisors weren't doing very much anyways. Pretty much why they could be automated.
      They just asked some basic pre-set questions and tossed you into one of the general recommendations.
      At best, their sales skills came into play.

      You're pretty much only getting useful advice if you get real custom advisor, which is more for the wealthy.

      The reality is that a lot of white collar jobs are not as 'thinking' as people like to think.
      In the end, they're as automatable as many of the manufacturing jobs.
      Never take someone's job loss as a joke. It's a person trying to make a living at the end of the day.
      But the sheer number of people who take a dismissive view of manufacturing or blue collar work because it is not 'educated' sometimes sickens me.

      Some jobs are kind of protected by government, but even our most 'people' jobs could have parts of it largely automated. Does anyone think every teacher should be building their own lesson plans. Is every class that unique? Nope. Most of that could be automated and largely speaking, a teacher can be more of a class supervisor with premade lessons plans/tests. There might still be specialized courses for kinds with disabilities or something, just like their are special financial advisors high net worth people, but the general case is automated.
      Large parts of accounting, law, even medicine can be automated with just special cases being left to professionals were it not for legal issues.

  4. Re:more squeezing by the 1% by xxxJonBoyxxx · · Score: 2

    >> I no longer have access to the advise of the human that I think is smarter than the rest of them

    I don't think you realize that UBS is actually doing you a service. Every time I worked with human financial advisers in the past they found ways to shave off a little here and there for themselves or their banks with transaction fees, fund sales, etc. Now that I have enough money to qualify for financial advice (at UBS and elsewhere) I only invest in a self-directed manner via brokers with minimal fees and in funds with minimal loads (e.g., Vanguard). Like the guy in the car rental commercials, "You don't have to talk to a human, unless you want to, which I don't."

  5. Re:more squeezing by the 1% by sinij · · Score: 2

    How am I supposed to win in that game?

    Unless you figure out how to do better than most, you won't win anything. Realistically, the best you could do is slightly under-perform market, which is still profitable. Now, if you intend to play - start educating yourself on how to do it. Good start would be index e-funds with sub 0.4% MER. If you want to get more sophisticated, get into diversified portfolio of dividend-paying large cap stocks - generally you will save MER but it will increase volatility of your portfolio.

    No matter how you invest, stay away from any kind of investment that doesn't correspond to tangibles - if there are no services or goods produced, then this isn't an investment but speculation designed to make you lose.

  6. Funny thing by MrKrillls · · Score: 3, Interesting
    I have no idea how well or badly the low end investor will be robo-advised ar RBS, but I'm pretty sure that a few pieces of financial advice, that could practically be dispensed on one side of a small piece of paper, would be the core of excellent advice for 99.9% of everyone.

    Set aside a little to invest on a regular schedule.

    Don't sell on market panic. Instead, consider purchases.

    Stick with simple, low cost diversified instruments.

    And so on.

    A robot could do the majority. My concern is the folks with unusual circumstances who need differing advise, or more handholding.

    --
    Don't step on the baby.
    1. Re:Funny thing by BarbaraHudson · · Score: 3, Insightful

      The human advisers have no skin in the game - they make money whether you do or not. At least with a robo-adviser, you'll pay less in fees.

      --
      "Transparent" is a shit show that trades on every stereotype going. A man in drag is NOT a transsexual.
  7. Thin end of the wedge by Coisiche · · Score: 3, Insightful

    Next up, perhaps, "robo-lawyers". Just for the poor people, obviously. There will be a minimum threshold to qualify for human lawyers as we diverge further into there being "one law for the rich".

    There will be a minimum financial threshold for more and more things. "Doctor" Watson for the poor, human doctors for the rich, etc.

  8. Firefox devs should be getting scared! by Anonymous Coward · · Score: 2, Funny

    If anyone should be scared by this kind of automation, it's the developers of Firefox.

    I think the first generation of automation to replace them will just take the Firefox UI and make random changes to it. It will remove widgets, move others around, add random widgets, and so forth. A possible enhancement would be for the automated process to randomly break extensions in some way.

    It's the second generation of automation that I think is really worrying. It will just check out the Chromium source code, change all "Chromium" string values to "Firefox", generate a large random number as the version number, perform a build, and offer it up as the latest version of Firefox.

    My suspicion is that the third generation of automation will be much like the second, but it will be able to randomly mark bug reports as WONTFIX or WORKSFORME.

    The most interesting thing is that most Firefox users won't even know that the automation has taken place! It will be business-as-usual for them.

  9. Re:more squeezing by the 1% by Aighearach · · Score: 2

    Advisors' advice under-performs the market.

    Having a special poohbah doesn't help you.

    His hat is just there to make you think he is important. It is a silly hat because anybody who looks it up knows that his advice will under-perform an index fund, which is the simplest easiest way to get into the market.

    The robots can be programmed to give different advise to different people if that is actually useful, just like the humans can be told what advise to give out. In fact, if the humans are giving everybody different advise, that just guarantees that everybody is performing that far under the market. And in that environment, check the fees and commissions; the more highly personalized small investments are, the more you're being shafted. Include all the fees before calculating profit; you'll be way behind an index fund.

    Pros generally do not beat the market. There is good advise to be had for small investors, but it is exactly the same for all of them; use an index, meet the market in the middle. Otherwise you are the little fish, and the system is designed for that.

  10. Income inequality growth related by millertym · · Score: 4, Interesting

    Outside of the just the concern about robotic systems replacing formerly human jobs is the expanded conversation about growth in income inequality. You know the board of directors aren't going to AI themselves out of their jobs. At least not before everyone else is. Which means all that same corporate profit is funneling to fewer and fewer people.

    If there is going to be a serious discussion about how to try to keep free, modern cultures in a healthy state in relation to income inequality, then automation needs to be a part of that discussion.

  11. Re:more squeezing by the 1% by magarity · · Score: 2

    Oh, but I can get the smarter human advise I need to make more money if I already have a significant amount of money, but not until then

    With modest amounts to invest your best strategy really can be summed up by a robot: buy index funds. You have to have serious capital to diversify enough to make more money reliably doing other strategies that need active management by a person.