23 August 2018
The tech that’s shaping financial advice
Technology is playing a greater role in the advice industry. Gayle Bryant outlines the latest innovations.
Technology innovations come and go at such a rapid rate it’s difficult for advisers to know what’s likely to have the most impact on their business and provide the return on investment to justify the integration.
In addition to incumbent adviser tech such as XPLAN and Coin, some of the popular emerging innovations include digital money management tools, robo advice and regtech solutions, artificial intelligence (AI) platforms, and concept illustrators, which help advisers discuss goals and scenarios with clients. Other innovations that focus on the enablement functions include video conferencing and digital signatures.
ANZ head of business controls and advice systems Adrian Kwa has noticed a shift in the way advisers use technology.
“A few years ago the majority of practices were still largely paper-based,” he says. “But today most advisers use software tools such as XPLAN or Coin, not only for compliance but to become more efficient with their back-office operations.”
The advice industry, has adopted technology, but change is a constant. Technology should also be viewed as an investment in the next generation. Going forward, it will become a bridge to link advisers to the next generation of clients.
“Retiree clients don’t mind visiting bank branches or offices for meetings but their children want advisers who can schedule meetings through video conferencing without needing to be face to face,” explains Kwa.
Advisers are starting to be ‘auditioned’ by this generation, before they start a financial relationship.
“There is a great opportunity to work closely with those who are not ready to purchase, but are looking for someone as a sounding board,” he says. “If advisers can offer them what they want, it will create a high level of trust and engagement.”
Digital options will help build this level of comfort as they can provide transparency.
How technology is helping advisers
Futurist Chris Riddell believes it’s important for financial advisers see technology as augmenting their offering.
“Technology is an extension of an adviser helping them to create real-time meaningful experiences to understand their customers in a way they haven’t been able to do before,” he says.
In relation to AI platforms he says, “We get very nervous when we start using the word ‘AI’ but it is there to help drive insights around customers so when advisers speak to them they gain a much deeper understanding. The platforms that are emerging are not in any way designed to replace them.”
The gamification of advice
Another trend is augmented and blended reality technologies. “When we’re creating experiences for people we also have to be looking at how we can gamify them,” says Riddell. “We should be looking at how we create environments that use virtual platforms that people can immerse themselves in.”
Gamification recognises people are more likely to change their behaviours when engaged in fun tasks that have rewards for positive actions and research. Financial advisers, for example, could introduce gamification to engage in an interactive journey for clients to see how their choices impact on their retirement goals. It’s not only novel, but shows the impact of their choices over time.
According to RI Advice Group national manager of advice and operations Joncarl La Rosa, several “concept illustrators” are also emerging. “These are not robo-advice tools in that they do not provide financial product solutions, but they have been developed to help the adviser discuss goals and scenarios with their clients,” he says. “These solutions are brilliant at helping the adviser and client to agree on what’s important and what will be the final advice framework.”
Taking away the mundane tasks
Advisers should adopt technology without being distracted by it. “Technology is not here to replace us or stop us having to speak or engage with people,” says Riddell. “Technology is here to take away the mundane part so we can have more valuable one-on-one experiences.”
This also frees up advisers to focus on income-generating activities rather than back-end time consuming ones that don’t add to the bottom line.
Robo solutions are predominately centred on portfolio optimisation and construction. “There is less awareness around ‘regtech’ solutions,” says La Rosa, “which focus on the compliance aspects of our business, such as whether our websites and social media uploads are compliant.”
What role will AI play?
La Rosa believes a lot of technology is still limited in terms of its ability to facilitate personal advice.
“Most emerging technology is focused around a single goal, such as retirement,” he says. “Should a client have a broader range of goals, such as wanting to pay off their mortgage and plan for retirement, then it becomes difficult as advisers can’t simply scope out a client’s circumstance because their technology can’t cater to it.
"We need to embrace technology in our back office to implement guardrails that ensure steps don’t get missed and help advisers position portfolios that provide the client with the greatest probability of success,” he says.
Technology developments attracting attention in the industry, such as AI, are still in their infancy, La Rosa says, and aren’t cheap.
“AI does have limitations but given its exponential gains, it’s only a matter of time before it branches out to smaller fintechs who will then introduce it more broadly into our industry,” he says. “Imagine an adviser being able to offer clients an app that has 24/7 access to a virtual AI adviser to answer queries or advisers who use an AI solution to help formulate advice solutions. Advisers shouldn’t fear this however, as client engagement will be human led and digitally enabled.”
He concludes that advisers need to look at technology that helps consumers understand the value of advice; “not just the relationship aspect, but the actual monetary value add”.
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