I have started to read a book called The Art of Thinking Clearly by the Swiss novelist and entrepreneur Rolf Dobelli.
It is very well written and is about cognitive biases that people regularly adopt. It is also mercifully short and avoids the preachy tone you find in other ‘self-help’ or ‘smart thinking’ books.
Over the years I have learned how to recognise and speak to my own critical inner voice. I even gave him a name: Lenin. It took a while to understand how much Lenin warped my perception of certain situations and how he hid in various corners of my mind.
I am reading Dobelli’s work in the hope I will be able to spot other tripwires in my subconscious.
Advisers who cheered the failure of Vanguard clearly had their reasons, but how much was pre-programmed?
The theme of biases came up for me when I was reading this month’s cover story, by senior reporter Momodou Musa Touray, on Vanguard’s closure of its two-year-old advice arm.
The initial announcement sent a shockwave through the advice sector and divided opinion. Some welcomed the news while others were less certain about the development.
The advisers who cheered the failure of Vanguard clearly had their reasons, but how much of this was pre-programmed? The debate about whether low-cost advice propositions can ever take off is probably as old as Money Marketing itself. And people’s positions have only got more entrenched with time. I remember when Nutmeg was the new ‘robo advice’ kid on the block, only to lose steam.
I am sure we will see, at some point, another company try to make low-cost advice work
Vanguard superseded Nutmeg and assumed the ‘crack the low-cost advice conundrum’ mantle. That has now ended in failure and it is hard to draw a definitive conclusion on the effort.
The sources Momodou draws on in his cover feature are as rich as they are varied. But some common themes emerge.
Vanguard was unable to make the offering profitable because it did not attract enough clients to scale the business.
The fund giant also appears to have underestimated how tough it is to make robo advice work, plus the economic background has not been easy. Since the launch in 2021 the world has been through a pandemic, the war in Ukraine and the highest inflation for 40 years.
Also, economic commentators have written widely about the way rising interest rates have ended cheap money and exposed businesses that rely on debt.
I remember when Nutmeg was the new ‘robo advice’ kid on the block, only to lose steam
That is not to say Vanguard’s UK advice arm was in debt, but climbing interest rates make it harder for many new businesses to stay above water.
There is no clear answer as to whether a low-cost advice model can become successful in the UK. It depends what your bias is and how that frames your approach.
But I am sure we will see, at some point, another company try to make low-cost advice work.
Michael Klimes is acting editor of Money Marketing. Contact him at: [email protected]
This article featured in the April 2023 edition of MM.
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