The future for technology in advice

If the advice industry wants to capture younger clients, including those who are likely to be the beneficiaries of generational wealth planning, then the industry will have to continue to adopt technology.

Conor Murphy, chief executive of Smartr365, insists: “Without a doubt, advisers will continue to introduce more and more technology into the services they provide. 

“There are so many parts of the advice process ripe for digitisation and automation: fact finding, know-your-customer, document storing, product sourcing, application submissions, compliance and more.”

For Niral Parekh, head of retail wealth and asset management at Capco, technology could go even further.

“We are still debating as an industry what constitutes ‘value’ for clients and what the best wealth management and advice model is for clients,” he points out.

“We believe technology will play a key role in driving the definition of value and making ‘money matters’ engaging and interactive, while understanding and mitigating our in-built behavioural and cognitive biases such as loss aversion and endowment bias.”

Anthony Morrow, chief executive of evestor, reiterates that advisers will use technology in the advice process more in future.

And that technology will be used for “better customer service, more efficient administration lowering costs and time for the adviser and, above all else, client demand”.

Robo market

When those in the advice industry discuss technology, the idea that it will improve client conversations comes up frequently. 

Is this really what happens in practice though? 

Rob Gagliardi, digital product and propositions manager at Bravura Solutions, explains technology has changed how advisers’ clients interact with their finances by delivering the means for them to do far more for themselves initially. He suggests advisers are still learning how to use this to their advantage though.

“By using technology to deliver efficiency to the advice and financial planning process, advisers will have more time to service clients,” he insists. 

But Mr Gagliardi also acknowledges: “What technology doesn’t tackle directly is the cost of providing advice, which at the moment is prohibitive to some. 

“This is where the robo market is interesting, with companies developing propositions that use technological automation and human interaction – hybrid advice models, to varying degrees.”

But one area that advisers will have to work on when it comes to using technology increasingly with clients is trust, as Roger Brosch, chief executive of Foster Denovo, points out.

“Technology-driven solutions, such as robo-advice, have an important role to play, particularly when it comes to servicing those parts of the market who may feel they are unable to access traditional financial advice,” he notes. 

“That said, I think providers have some way to go in building trust before these types of solutions are fully embraced.”

So while the emergence of artificial intelligence cannot be ignored, he thinks its use in the industry remains “in its infancy and we’re yet to see its true potential”.

The human touch

Mr Brosch also adds: “Human interaction will – I believe – remain a constant. Technology will help to underpin, but it won’t replace, financial advice.”

Research by US-based Hartford Funds backs up Mr Brosch’s prediction.

Its survey of 116 US-based financial advisers, the results of which were published in July last year, show advisers prefer face-to-face meetings with clients.

The research reveals 73 per cent cited face-to-face as their favoured method of communication with clients and prospects, while only 12 per cent of advisers found video options, such as Skype and FaceTime, useful.

But the same survey found advisers expect the frequency of communication they have with clients to increase over the next five to 10 years. This suggests they may have to adopt technology, as Julie Genjac, managing director of strategic markets at Hartford Funds notes.

“As advisers thread the needle and both communicate more frequently and meet in-person, it’s essential that they embrace firm-approved digital alternatives (like video chat) that allow for more regular, face-to-face interactions,” she says.

John Diehl, vice president for strategic markets at Hartford Funds, suggests there will even be some clients who are best served by technology – perhaps those who do not have a “very complicated financial picture”.

“Their financial life is not extremely complex,” he observes. “Technology may be employed to help them derive what some of the best first steps are to take.

“As a person’s life becomes more complicated – where there is more risk from making mistakes – they often express a desire to reach out and talk to someone.”

Stuart Wilson, corporate marketing director at more2life, agrees: "It’s likely that we’ll also see an increase in the use of technology by advisers, but the value and importance of providing face-to-face advice will remain, particularly with older equity release customers."

Finding a balance

But how can an adviser firm even know whether it should go fully digital, or not? 

The answer is advisers are, in all likelihood, increasingly adopting technology into the advice process without even thinking about it.

Terry Huddart, head of proposition at the lang cat, proffers: “Just because a lot of firms are pushing towards a fully digital model, doesn’t mean it’s the answer for everyone. 

“Although the range of software and options available to go digital is growing ever richer, there’s never any real substitute for being with a client face-to-face for most models and situations. 

“This doesn’t have to turn into a battle between old school versus new school. Instead it’s about each firm finding the right balance for them – there’s more than one way to help a client sleep better at night.”

Tony Bray, head of business development at threesixty services, suggests: “Firms need a better understanding [of] how technology can improve the experience of clients and staff. 

“It’s vital that small firms do not over engineer their technology proposition. They need to fully understand the current needs of their particular clients, and what the clients want in the future. 

“If they understand that, the choice of technology partners becomes so much simpler.”

eleanor.duncan@ft.com