The Rise of the Robots – ‘no Threat to Advisers’
In his 2009 book – The Lights In the Tunnel: Automation, Accelerating Technology and the Economy of the Future – Silicon Valley entrepreneur and futurologist Martin Ford argued that automation and the development of artificial intelligence could lead to mass-unemployment and dramatically increasing social inequality as large parts of the human workforce are rendered obsolete.
A number of studies and books have echoed his thoughts since then and in his 2015 follow up – the Rise of the Robots: Technology and the Threat of a Jobless Future – he argues that the effect of artificial intelligence would be felt way beyond the factory floor as highly-educated people such as lawyers, radiographers and even financial advisers find themselves dispensable.
Muckler added the last example, but with the FCA definition of advice being broadened to encompass automated advice it would not be too much of a stretch to see that as the end for poor old Farquhar and his Hob-Nobs.
‘Not so’ says Pete Connell, Managing Director or one of the new breed, Wealth Wizards, ‘our technology will not put advisers out of business – they just need to focus on what their value is – probably not administration and back offices processes’
Mr Connell does not believe that robo-advice will plug the gap left by the shortage of human advisers; Wealth Wizards system offers advice which is mainly online, but if the system flags that assistance is needed a human adviser steps in to consider the advice that has been generated.
‘We believe the (human) advisers will be hugely important’ he continued ‘their job will be different because some bits will be done digitally, such as the administration. It takes three years for an adviser to come to market and there are not enough companies training them, because of the expense and once you have done it they tend to leave and go out on their own’
Following the acquisition of a majority stake in Wealth Wizards, LV= uses its advice platform for its telephone retirement service, Cora, to generate personal advice for pension savers planning for retirement.
‘We believe the (human) advisers will be hugely important’
Wealth Wizards’system allows clients to fill out an online form, which generates a report that is checked by an adviser, who contacts the clients to ratify the recommendation.
Wealth Wizards’ platform is designed to be white labelled and Chief Executive Andrew Firth says his company is having ‘interesting conversations’ with ‘large brands’ looking at using their service to provide robo-advice: ‘Other financial services, such as protection and mortgages, are on our road map, but at the moment we are focused on planning for retirement, because that’s the biggest challenge and a huge societal issue.’
With anything up to 70 platforms in development in the UK, LV=’s Head of Policy, Phil Brown, recently said that its service was the only one claiming to offer robo-advice that actually offers a personal recommendation; the inference being that to qualify as ‘advice’ there has to be some human participation.
In an industry that is still writing its rule book this is one of many issues that will require definition and in the meantime it is not unreasonable for LV= to claim that as a USP.
Fintech consultancy firm Altus says that the companies developing automated advice propositions range from small start-ups to large banks.
Principal consultant Simon Bussey says some of these companies are working with Altus, including two banks and some asset managers, platforms and smaller players, although he expressed scepticism about whether any of these companies would come up with something innovative.
‘We believe that there are more than 70 organisations who are developing digital or automated-advice propositions along the value chain, from big banks to small start-ups, ’ said Bussey ‘there is plenty of noise but many are not offering anything different or exciting for the customer.’
Mr Bussy said that the end-to-end journey of many of the ‘new’ propositions is no different from the risk assessment and stochastic modelling tools developed fifteen of twenty years ago.
‘Now is the time to re-imagine how we need to engage the customer, and not just re-engineer the same tired process’
However, he cites Wealth Wizards as an example of a company that is offering something genuinely innovative: ‘The retirement and savings landscape changed post-RDR and we are now seeing collaborations between big brands, who can bring a trusted name, existing customers, credibility and funding, and small, agile organisations who bring an agile approach, entrepreneurial thinking, and a burning desire to build smart solutions that can disrupt a market.’
‘Now is the time to re-imagine how we need to engage the customer, and not just re-engineer the same tired process. These collaborations could be a huge opportunity.’
He added that advisers could find themselves battling it out with large technology companies: ‘My prediction is that robo-advice becomes part of a hub and isn’t restricted by industry boundaries.’
‘Think about WeChat in China and how it has become the ‘go to’ place for consumers looking for a range of solutions – from online shopping, digital payments, ordering a taxi, keeping up to date with media or celebrity blogs, to banking services and simple investments.’
‘This proposition is slowly being copied by Facebook Messenger. The challenge is: how do we create a proposition in the UK that is centred around the customer needs and how their lives are evolving, and not just around a financial services product?’
So, it sounds as though Farquhar’s membership at the golf club may be safe for a little while longer, as long as he can adopt a role that requires him to embrace artificial intelligence and become an active participant in every facet of his clients’ activity – piece of cake? sorry – should be a piece of cake.
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