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National advice firm launches DB transfer 'robo-paraplanner'

National advice firm Mercer Jelf Financial Planning has launched a defined benefit transfer 'robo-paraplanner' to automate its processes in association with robo-adviser Wealth Wizards.

National advice firm launches DB transfer 'robo-paraplanner'

National advice firm Mercer Jelf Financial Planning has launched a defined benefit (DB) transfer 'robo-paraplanner' to automate its processes. 

The service has been built by LV= backed robo-advice company Wealth Wizards as part of a partnership between the two companies. It was developed over a year long testing period. 

Advice about DB transfers has come under the spotlight since pension freedoms were introduced in 2015. Problems with advice given to the stricken British Steel Pension Scheme last year brought national attention to the market. 

Anyone with a pension worth £30,000 or more must seek advice before transferring out, meaning many people have had to seek advice for the first time. There have been some complaints that such advice is too expensive, especially for people with smaller transfer values. The regulator is now also considering a ban on contingent charging for DB transfers, where clients only pay if the advice is to go ahead with the transfer.

Richard Wilson, UK leader for defined contribution pensions and individual wealth at Mercer UK, said the automated service would hopefully prove 'cost-efficent' for clients.

Wealth Wizards has recently launched an artificial intelligence (AI) adviser, which learns how to deliver advice from previous cases. The service, which is called Turo, can learn how a specific firm delivers advice to deliver automated advice in line with existing policy. 

‘If you imagine how a human being makes a complex decision with the help of a financial adviser, such as transferring out of a DB pension, or whether to annuitise versus stay invested, it’s a complex decision made up of a number of factors. What traditional advisers would have done is take a decision tree. What we’ve been developing is an ability to look at the key factors that drive a complex decision,' explained Wealth Wizard chief executive Andrew Firth. 

‘For example, if we took a DB transfer, it’s made up of a series of complex economic factors like hurdle rate and critical yield, and some quite complex psychological decisions like someone’s attitude to risk, their willingness to work after retirement age. By pointing AI at the training data, we’ve worked out what weighting a professional adviser is giving to those various factors.'

Turo could also be used as a regulatory tool to check existing advice, he added. 'Once you’ve got a model of what weight different factors have, you not only identify how you as a business want to do things, you can also analyse what a traditional adviser is doing and see whether they fit within the average of what is being done in your firm.'

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