INVESTING EXPLAINED: What you need to know about Hybrid Advice – a mix of digital and old-fashioned advice from a person
In this series, we bust the jargon and explain a popular investing term or theme. Here it’s Hybrid Advice.
Is this gardening related?
Nothing to do with new plant varieties, but a form of financial advice also known as ‘tech-enabled’. It is a mix of digital and old-fashioned advice from a person.
The excitement about hybrid advice has replaced the enthusiasm for ‘robo-advice’ in which all processes are automated. Both are cheaper than hiring a wise and knowledgeable human being to help with your financial affairs.
Shake on it: Hybrid advice is a mix of digital and old-fashioned advice from a person
Hybrid advice combines ‘human-assisted’ personal guidance on investment and other financial decisions, provided in person, on the phone or online, with a ‘consumer-led’ DIY automated service on a platform, which is an online financial supermarket). So, a qualified individual might give you recommendations on strategy which you implement yourself online, or via an app.
How big is the market?
Huge, according to proponents. The ageing of the population suggests that demand will grow as more people seek help on making the most of their retirement savings, But, although some believe that the hybrid model is the future of the £2trillion financial advice sector, others are dubious. they think that, a bit like hybrid working where people toil partly in the office and partly at home, it could result in serious problems.
Why is it a talkIng poInt now?
Hargreaves Lansdown (HL), the name behind the UK’s largest investment platform, has plans for a hybrid advice division which aims to provide quarter of the company’s new business by the middle of this decade. About 10,000 of HL’s existing customers receive personalised advice at present. But it seems that others often go elsewhere for such guidance when they become wealthier. the typical annual charge for personalised advice is 1.5-2 per cent. At HL, the hybrid advice fee would be lower.
Is everyone convInced?
Er…no. Peter Hargreaves, HL’s billionaire founder and its largest shareholder, with a 20 per cent stake, is bitterly opposed to the scheme. this week he described it as ‘irrelevant’, claiming that it is the reason for the 38 per cent fall in HL’s share price over the past 12 months. this decline has also been a source of woe to those who hold HL through a fund or trust. the LF Lindsell train UK Equity and global Equity funds and the Liontrust Special Situations fund own shares in the company.
Why Is Hargreaves so worked up?
He contends that HL is being distracted from its core business. He also argues that there is a risk that those who use the hybrid service could be directed towards wrong types of investment.
Who’s provIdIng hybrId advIce?
Names like Abrdn, Bestinvest and vanguard. Others are talking about launching a service. Holly Mackay, chief executive of the Boring Money website, says those interested should compare the various offers. Some are designed for investors who are starting out, others for those who have already built a portfolio, while a number cater for a broader range. Boring Money has a comparison table.