Blue Flower

'A passive tax to subsidise active management' by Steve Johnson on Financial Times published on 26 Sept 2016.

Dear Steve,

Let me try to summarise the case that you are making as per my understanding, in the following simple words: 

The active managers do the 'Saintly job' of capital allocation.  They are too important for the survival of capitalism.  They look 'ugly' because of the lower fees in passive management. So suggestion is to tax the passive products and make them as 'as ugly' as actively managed products. 

Many of us have still not forgotten the 'too big to fail & too important to fail' stories from the last financial crisis.  

I think the above case, suffers from few fundamental fallacies:

1.   Please remember the publicly traded 'stocks & bonds' are just 'one' of the ways of capital allocation. Allocation of capital is the core function of capitalism. It will continue to exist.  As the 'search of Yield' continues,  the capital allocation will also continue. The capital will find much easier and efficient ways.  The raise of alternate investment platforms is just one example of this process of discovery. 

2.  There are various fundamental reasons why the active managed funds did not deliver performance.  Those reasons needs to be addressed to resolve this problem. Fee is just one of problems.  In fact, many investors would be willing to pay higher fees, provided there is proportionate increase in investment product performance.

3. The main-stream investment marketplace is an over-segmented and over-crowded market place with lot of products with mediocre performance. As per Investment Management Association, there are about 200 firms in UK that market thousands of their products.  Financial Times, itself publishes NAV for products from about 140 firms.  I think it will reduce to a total about 40 in the next 10 years unless active management firms make radical changes products and also to their business models.



1. 'A passive tax to subsidise active management' by Steve Johnson on Financial Times published on 26 Sept 2016. (need subscription for reading the online edition)


About couple of centuries ago, may be even pre-industrial revolution, the ratio of tailors to overall population would have been more.  i.e. There would have been lot more tailors as percentage of population.

Today, it’s not the case. That does not mean more people are roaming around naked :-). It is because our dresses are made in a more mechanised way. There are still people who get tailor-made dress, but as we all know it is expensive and hence for special occasions. 

Similarly, the 'tailor-made financial advice' market will also go down the way of 'tailors'.  We are not trying to be a 'Nostradamus' with this prediction. We think above scenario will be a natural evolution based on technological advances. Human advisers will not be able to cope with increasing huge demand for advice. 

That is the problem, we are trying to solve. Our Robo-Adviser will provide personalised unbiased advice.

Please refer to the following document that shows the returns of different of asset classes over the last 40 years.

 Do you know that 'Gold' is the best performing asset class in the last decade ? But I have never seen an Adviser recommending investing in Gold. 

The traditional regulated advice is more 'American' in terms of focusing on 'paper assets' like stocks and bonds. But Our Robo-Adviser will cover a broader spectrum of different asset classes.

There are several 'Robo-Adviser' start-ups. They have 2 big issues: first there is NO 'Robo' & Second there is NO 'Advice'. Yes, those 'robo-advisers' are more of 'automated investment platforms'.  But our differentiation is as follows:

·        It will provide actual advice in terms of investment platform selection, Retirement pension calculation, portfolio construction, etc. 

·        It will be an adviser that is based on 'whole' of the market and across asset classes (not just paper assets).

·        It will be a platform that is based on existing investment products across the industry. We will also be working with existing independent financial advisers. Customers will have a choice to take advice from Automated or Human advisers. 

·        The cost of customer acquisitions is very high, majority of Robot advisers will go bust before entering profitability. But we will work with existing producers of investor products and human advisers using our platform for a transparent fee. Our customer acquisition cost will be significantly lower thereby increasing our pace to sustainability & profitability.

·        We will have voice integration (using Amazon Alexa, Google Assistant and Apple Siri). The investor will be able have a conversation to the Robo-Adviser like talking to a Human Adviser. It will be an 'Adviser, to whom an investor can talk to, whenever they need to'. The online adviser will be available to talk, irrespective of investment pot size of the investor.  Imagine an investor asking

             'Alexa ask AdviseCentral about my pension performance?

              and then our Robo-Advisor responds with relevant response after looking at the pension portfolio'. 

       That's our vision.  

In few months’ time, this section will have a Robo-Advisor feature  that will help you to choose a SIPP provider !! You need to be registered to try that feature. Keep watching this space...



We are a small team of dedicated individuals who have decades of experience in design and implementation of web platforms for large investment management companies.

It is a team with passion to disrupt and positively change the investment and advice market place.

We believe it is still stuck in the early 20th century. We want to drag that market to the 21st century.  

So, we decided to form a business with the primary aim of 'helping people to build a better future through better advice and investment'.


AdviseCentral has been selected to be part of the Entrepreneurial-Spark Fintech Accelerator, a business accelerator program based in the spectacular RBS Headquarters in Edinburgh, UK.



AdviseCentral has applied for regulatory guidance under "Innovation Hub" initiative from FCA.

As per a recent survey, only 7% of the UK working population is on track for becoming retirement ready. 

As per another survey in UK, 69% of the financial advisers refused to take on new clients as they felt that those seekers cannot afford financial advice. 

Some people call it 'Advise gap'. The problem is that the gap is of the size of 'Grand Canyon’!

Yes. This is the problem that we are trying to solve. 

Advise Central aims to provide affordable, accessible and online advice. It will be a hybrid platform that combines both Automated (Robo-Adviser) and Human Advisers. 

There will be some services that will be provided by automated advisers. The users can also choose from registered independent human advisers whenever they wish to consult. 

What!!  another Investment Platform? There are so many platforms backed by big Life Insurance and Fund houses. 

That's part of the problem, because those platforms are owned by 'producers of investment products', their independence is questionable. Those platforms become more questionable when they have their 'own' Advisers who are not independent to provide an unbiased advice.

Single platform for 'all' investment products.

As per Investment Management Association there are about 200 fund houses in UK.  They produce thousands of investment products.  There is no single platform to search and compare these products.  If you thought buying a train ticket with so many options was difficult then you will be baffled with investment market place.

Now alternate Investments products is also available. The FCA has decided to treat the retail investor as a grown-up adult for the first time & has decided to allow retail investors to invest up to 10% of their net worth on 'alternate investment' products.  There is no single platform to compare these alternate investment products. 

Advise Central will be the first investment platform to compare both traditional and alternate investment products. 

Underfunded pensions are the next big problem that is waiting to come up in developed economies. 

That's the reason for introduction of ‘Auto Enrolment' for pension in UK. But still employers choose pension platforms that does not provide wide range of investment options mainly due to the higher cost involved.

Advise Central will evolve in to a low-cost, sophisticated, independent and unbiased advice platform.  

When will the platform be live?

We are working on developing the platform. We are also working with investors to back the initiative. We hope to get into Innovation Hub from FCA.

We have reached out to FCA for regulatory support using FCA-Innovation Hub. We hope to get the get into the FCA Sandbox program and 'go live' in 2018.

Until then, if you are a curious investor or an interested Adviser or a Nosy competitor then please get in touch with us using the online form