Financial wellness: AI-powered Multiply delivers holistic financial advice

The Financial Conduct Authority (FCA) has approved the first artificial intelligence (AI) app offering consumers regulated, automated advice, delivering financial planning to investors with less than £100,000; having come through the FCA sandbox.

Multiply is described as the second wave of innovation after ready-made investment portfolios and delivers financial advice based on an individuals goals and overall financial wellness.

In a press release announcing its approval, Multiply said that it sought to reduce the UK’s advice gap, where 16m people are excluded by the cost of financial advice; it will be rolled out to the mass market over the summer.

Following 18 months of testing, FCA confirmed that Multiply’s technology is advanced enough to make complicated calculations of an individual’s situation and deliver suitable recommendations tailored to that person.

In making the announcement, CEO Vivek Madlani said: ‘We’re immensely proud to be the first company to receive FCA approval to automate the full advice process. At the moment the industry is going backward, the advice gap is widening.’

In the press release, Boring Money CEO Holly Mackay said Multiply represents the next wave of innovation in robo advice: ‘Pensions and investments remain a baffling, intimidating unknown for most people, and financial advice is largely the domain of those with more than £100,000 to manage. ‘There is a huge need for tech-enabled services which effectively tell people what to do.

‘Multiply represents the next wave of innovation in robo advice’

‘The first wave of innovation put ready-made investment portfolios online, simplifying the process and making things better. But the bigger problem is not a product problem, it’s an advice problem. And anything which simplifies this and makes it more affordable and accessible to more people is a great step forward.’

Building a brand and creating awareness

Altus Consulting director of wealth, Simon Bussy, told Money Marketing that Multiply will face challenges familiar to the robo advisors in creating a brand; it takes time and a considerable amount of money to create brand awareness and achieve mass market distribution.

‘Multiply is the only app that automatically explores an individual’s whole financial life’

Positioning Multiply in the marketplace is sure to rekindle the debate around whether individuals want bona fide financial advice or guidance, and precisely where the line between them lies.

‘The conversion rate from ‘interested’ to ‘purchaser’ will need to be significant and the fee income generated from the third party must be higher than the acquisition cost’, Bussy said, adding ‘Some consumers will want a quick ‘guided’ journey, while others will require personalised advice and potentially will want to talk to an adviser, even if it’s just to validate or reassure.’

Financial wellness

With companies in particular taking a growing interest in the overall financial wellbeing of their staff, Multiply is the only app that automatically explores an individual’s whole financial life including, inter alia, pensions, investments, savings and insurance.

The app invites users to share their goals and financial situation, and it then tells you which type of product and which specific providers will work best for your needs, and how much you should be putting into each; Its aim is to enable customers to create a financial plan in just 15 minutes.

‘enable customers to create a financial plan in just 15 minutes’

Bussy said: ‘In an extremely competitive marketplace, this development raises the bar, and moves the story on from the ‘linear-journey-into-an-in-house-portfolio’ investment proposition favoured by some digital wealth services to something broader, just as Pefin has in the United States.

‘Multiply’s aim is to enable their users to create a basic financial plan including emergency funds, medium term goals planning, and longer term retirement planning, each of which will refer the customer to a third party solution (from which Multiply will derive a fee or commission, depending on the product purchased).’

Multiply says its advice is impartial and uses algorithms which, unlike altogether fleshier advisors, have no human bias and are not hardwired to mis-sell products; an individual’s financial situation is constantly reviewed every time there is a life change or a new financial product comes out, unlike a traditional IFA who would typically conduct an annual review.

Making further comparisons with an IFA, Mr Madlani said: ‘We want to put the power of a personal financial advisor in everyone’s pocket to help Brits access the advice they need to do the stuff that really matters to them – buying a home, saving for retirement, starting a family.

‘It is extremely encouraging to see the FCA advice unit actively supporting ideas like ours. Their commitment to bringing innovative firms to market that will benefit consumers will see big societal issues like the advice gap tackled, and hopefully solved, sooner rather than later.’

Learn more about automated investment solutions and robo advice: