M&G Wealth, the new wealth management arm of M&G, has signed a deal with Australian fintech Ignition Advice to help it launch a low-cost, hybrid digital advice service this year. 

The new service, due to launch by the end of 2021, will combine digital technology with human advice and will be aimed at clients unable to afford traditional Financial Planning.

M&G Wealth says it will be aimed at existing customers first before being rolled out to a wider audience.

The company says the “streamlined” proposition will reduce the time and cost to deliver advice and will help those with smaller sums of money to save or invest. 

The service will be delivered through M&G Wealth’s existing advisers, the company said.

Sydney-headquartered Ignition Advice announced its move into the UK in this month and is establishing teams in London and Edinburgh, following a Dublin presence in 2017. It specialises in helping large firms develop digital direct to customer products and services.

Richard Caldicott, deputy CEO, M&G Wealth Advice, said: “There is no doubt that there is a large population of investors who would benefit greatly from financial advice but they perceive it to be inaccessible and too costly. This is at the root of the advice gap and something we are fully focused on addressing." 

Terry Donohoe, CEO Europe, Ignition Advice, said: “Our experience in Australia and the Republic of Ireland has shown us the value of this model to consumers and the potential it has to democratise financial advice. We’re excited to bring our tried and tested tech to the UK market with M&G Wealth Advice.”

Tech expert Ian McKenna, founder of the Financial Technology Research Centre, said: “This morning‘s announcement is significant for Ignition Wealth, M&G and the wider marketplace. For an Australian Fintech to win such a prestigious UK customer is clearly a great way for them to enter the market. 

“Equally for M&G complementing their existing traditional restricted advice team with a low-cost hybrid automated proposition is a great way to support hundreds of thousands of former potential customers who will be approaching retirement and need help but have a level of assets that will make full blown traditional advice uneconomic. 

“In a wider market context this shows that whilst it has taken time for automated decumulation advice to be developed it is now becoming an increasingly competitive sector. We expect to see a number of other organisations currently in stealth mode go public before the end of the year.”

Financial Planning Today Analysis: The next battleground in wealth management is likely to be in the emerging hybrid digital/human advice sector. Clients, it seems, are quite happy to manage their finances digitally most of the time but want the reassurance of a helpful human, either by video or audio, when they need extra help. Most robo-advisers seem to be moving in the hybrid direction and others are also developing hybrid options. Robo-only advice seems to be yesterday's news with great disappointment in the robo-advice sector and its sheer lack of traction. All of this is unlikely to trouble professional Financial Planners whose human-first approach is expensive but sought-after by clients with a bit of cash to invest. That is unlikely to change but planners will have to be wary of the new hybrid services chipping away at their traditional client base. They may, of course, be tempted to join the hybrid rush and some have already dipped a toe in this area. As ever, service will be key.