Speaking at the AFA national roadshow event in Sydney on Wednesday, the financial services exec and self-described “techo” said that while he is “250 per cent pro-advice” and supports the future growth of the sector, a number of serious challenges can be gleaned from global trends.
“There is such a vast quantity of information available online that people are struggling to wade through it all to work out what is wrong and right,” Mr Heine said.
“At the same time, fewer are willing to seek out professionals who provide specialised information,” he added, describing this trend as the “Google effect”.
Mr Heine said an analogous example is the health sector, where visitations with professionals have dropped off since online medical self-diagnosis became common.
In addition, Mr Heine pointed to developments in the US and UK and an Oxford University report which suggested “financial advice is among the 10 professions most likely to be computerised” in the future, anticipating that “commoditised advice is likely to be replaced by robots”.
However, he added that it is “not all doom and gloom”, with some technological advances – such as the rise of online adviser ratings websites akin to TripAdvisor – likely to assist leading advice businesses, and some aspects of the advice profession likely to endure.
“The only real sustainable advantage is understanding your clients,” Mr Heine said. “You need to be client-obsessed in the age of customers.”
AFA Adviser of the Year and JBS Financial Strategists director Jenny Brown told the same audience that while it is conceivable that the “basics will be replaced” by automated technology, the advice profession will survive.
“You can’t replace a relationship with a robot,” Ms Brown said.
You wont need to write encyclopaedia length SOAs & pay ridiculous PI premiums to service the robot.
I’m happy to service the robot. A good business. The real problem however, is to find an accountant that has more personality than a robot.
I liken this to technology advancements some years ago which occurred in underwriting. At the time, the discussion of rules engines or automated underwriting engines was a hot topic with the first reaction ‘will this replace an underwriter?’ Time now shows that it helped to enhance the time an underwriter has on more complex matters, and led to further advancements with predictive modelling now working well overseas. Perhaps a similar course will occur through advice.
Hi Everyone, The reaction and subsequent discussion around this topic has been really interesting. Whilst there is still a lot of healthy debate I think the most important outcome is to be aware of new trends and then decide if you view them as a threat or an opportunity. As an industry we have been slow to adopt technology and we need to better understand that our clients are increasingly looking to interact with us in different ways, at different times for different reasons. Quality advice will continue to be important – clients value the “Peace of Mind”,knowledge, experience, and accountability that advisers provide but we need to get better at articulating it and become “client obsessed”.
If you are interested in viewing the presentation mentioned in the article you can view at below link. Happy to discuss further.
http://www.slideshare.net/Matt…
Based on my experience I’ll take the robot rather than the relationship.The robot will be programmed to follow the corporations act and not conduct fraudulant activities.As for the relationship …well emotional aspects such as greed can come in to play.A robot doesn’t have emotions.
No need to get nasty Adam…I’m merely making an observation and my opinion. It is not a reflection of my business or yours. Of course a GenY with $150K could value some advice but let’s all have an honest look down our client lists and see what the average age is and how many younger ones are coming through.
I have a feeling more affordable and accessible advice will be required in budget planning and debt reduction.
I had a cist on my ear which Google told me was nothing until my specialist said it was cancer. Google told me I’d be dead 18 months ago, my specialist said I’d survive. Somehow the personal individual specific advice was right! Go figure!
Well this topic has certainly created a lot of discussion. A contrarian view – you are all right! You all remember the Commodore 64? That computer was awesome in its time, the first PC that most people bought, now its a dinosaur and our mobile phones have more power than the 64 could ever imagine.
We crave technology and human interaction at the same time, we need connections both computerised and human. Some of us have simple live’s and some are complex, thus needing different ways of interaction and connection. The true genius organisations to grasp that concept will win over time.
Financial advice, like all other professions, will adapt to this over time and embrace new ways of interacting with people.
You’re right in some ways Gerry – I have done a weekly newsletter (about 3000 – 4000 words with news and discussion of world/domestic events and markets, for past 15 years) as well as run my practice as totally fee for service, for 25 years. Matt is right that much of the advice process/SOA can be delivered as modelled work – therefore para or computer-delivered, so advisers need to be counsellors and coaches more than product sellers. The relationship needs to be based on a retainer each year and fee for specific work/responsibilities. Good clients will deliver an average of $1250 – $2500pa and an adviser can handle about 150 of them, for revenue of around $300,000 – $350,000 pa. Economies of scale for practices (own AFSL)of 3-5 advisers (with 4-6 support staff and shared compliance costs should deliver net incomes of $200,000 to $250,000 per adviser. That’s the future of those who succeed and remain in 10 years from now. Then there will be the banks!
Gerry, you either have no idea about real strategic advice, or your client base simply services the lowest common denominator. I have many Gen Y clients earning over $150K that are happy to pay for quality (and complex) advice – not the sort of advice that you have quoted (and seem to only have experience with).
Spot on Gerry, 100% accurate. Advisers can bang n all they like about “advice”, “service”, no commissions, FPA membership, Education standards & Navel Gaze about the quality of their advice but when it boils down to it their dumb clients who put up with the “FEE for Service” mantra & wear the multi thousand dollar service fees (of which most are just not warranted or needed and the adviser KNOWS IT) will simply drop off in droves. First as they get educated but then ther kids will be yelling at them to avoid us and go direct, search out a solution etc etc etc. Sure there will still be the “Anti ATM” crew who just cant give up their passbook but they will die off & the advisor will be a dinosaur. Better start getting an alternative business in mind guys. Yours and my days are wwell & truly numbered. Wont happen overnight but it will happen, just ask a “traditional” stockbroker if you can find one. And NO, the complex strategies you advise on today will not save you, they will be easy.
Actually Gerry (and Matt), you are wrong. Perhaps you are a dinosaur? I am a young adviser with predomonantly young clients, and they are happy to pay for advice. Google is a positive for our profession. It is a cheap way to market our businesses and clients come to us better informed. Those who want to self-manage their finances are better informed than ever, which is a good thing for them and us. We benefit because there are no more time wasters shopping around trying to get free info from advisers. Only genuine clients come to see us. Happy days!
I am afraid this is all nonsense. The same predictions were being made in 1980 and one smart UCLA Professor said that the paperless office would appear when the paperless toilet did. Neither have appeared and offices now have more paper You have to get a grasp on reality guys and figure that no adviser is going to be replaced by a robot, more likely the Universities are replacing researchers disconnected with the private sector with those that are connected. This UK person sounds like one of those going out he door.
There never has and never will be a one size fits all solution for customers.
The google effect has been really helpful at reducing the tyre kickers wasting advisers time. It amuses me that these tyre kickers are now an important customer component to target – why ? Given the current CBA debacle and the angst we all experience with banks and other big bureaucracies it amazes me that banks are seen to be a threat to the advice profession?
I can continually buy at market peaks as the media and investment newsletters get over-excited, and then sell at the bottom when there is doom & gloom. I can act on hot tips with no basis and incur large amounts of brokerage fees and potentially capital gains tax (if I am lucky enough to make a gain). I can do all this without the assistance of a Financial Planner thank you very much.
I can also perform my own dentistry through information gleaned from a google search.
Why would I need advice that is tailored to my individual situation, including constructing and maintaining a portfolio that is specifically designed to meet my specific life goals.
Why would I pay for this personalised advice from a trained professional when I get can free general advice from a journalist, or better still, an anonymous person in an internet chat room?
Gerry, you’re quite right and if that’s all the younger generation want and they need (as far as they are concerned), they’ll continue down that path. The issue of claims for those placing insuracne online will come back to bite people and they will be on TT and ACA when it happens. If it’s too easy to get with litle questions asked, then you get put through the ringer at claim time, when you most need simplicity. The younger generation will get this in due time. Reg contributions to a managed fund is already competetive with ASG and alike, so no change. Realtionship (fuzzy or not) is what people want and need and only in their own time (not necessarily age-dependent).
The industry will go the way of the dinosaurs whether you think a warm and fuzzy relationship will work or not. The younger generations will not pay $500, and certainly not $2000 for a Statement of Advice that tells them they need some life cover and add $100pm to a managed fund. They will do this online direct through their bank. What’s probably more useful is a subscription based online newsletter. Dealer groups can’t handle that though…doesn’t make money for them and the current crop of newsletters going around are the same old tired content.