What is Hybrid Advice? Investing Explained

In this series, we break down the jargon and explain a popular investment term or theme. Here’s the Hybrid Advice.

Is this gardening related?

Nothing with new plant varieties, but a form of financial advice also called ‘tech-enabled’. It’s a mix of digital and old-fashioned advice from a person.

The excitement about hybrid advice has given way to the enthusiasm for ‘robo advice’ in which all processes are automated. Both are cheaper than hiring a wise and knowledgeable person to help you with your financial affairs.

What’s involved?

Hybrid advice combines ‘people-assisted’ personal guidance on investment and other financial decisions, in person, over the phone or online, with a ‘consumer-led’ automated DIY service on a platform (an online financial supermarket). A qualified person can therefore give you recommendations on a strategy that you implement yourself online or via an app.

How big is the market?

Huge, according to proponents. The aging population suggests that demand will increase as more people seek help to make the most of their retirement savings. But while some believe the hybrid model is the future of the £2 trillion financial advisory industry, others are skeptical. they think it, a bit like hybrid work where one toils partly in the office and partly at home, can cause serious problems.

Why is it now a talking point?

Hargreaves Lansdown (HL), the name behind the UK’s largest investment platform, is planning a hybrid advisory division that should supply a quarter of the firm’s new clients by the middle of this decade. Currently about 10,000 existing HL customers receive personal advice. But it seems that others often turn elsewhere for such guidance as they get richer. the typical annual cost for personal advice is 1.5-2 percent. At HL, the hybrid advisory fee would be lower.

Is everyone convinced?

Um… no. Peter Hargreaves, HL’s billionaire founder and largest shareholder, with a 20 percent stake, strongly opposes the scheme. this week he described it as “irrelevant” and claimed it is the reason for the 38 percent drop in HL’s stock price over the past 12 months. this decline has also been a source of woe for 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 hold shares in the company.

Why is Hargreaves so excited?

He argues that HL is being diverted from its core business. He also argues that there is a risk that those using the hybrid service could be directed to the wrong kinds of investments.

Who gives hybrid advice?

Names like Abrdn, Bestinvest and vanguard. Others talk about launching a service. Holly Mackay, chief executive of the Boring Money website, says those interested should compare the different offers. Some are designed for novice investors, others for those who have already built a portfolio, while some offer a broader scope. Boring Money has a comparison chart.