Speaking to ifa’s sister publication AdviserInnovation, Decimal chief executive Carolyn Colley said the only barrier to automated advice replacing traditional advice methods is that it cannot engage in face-to-face relationships.
Ms Colley said that while the relationship side of financial advice cannot be replaced, the maths and recommendations that sit behind it can.
“I think, generally speaking, most people now start a purchase journey online – whether it is the research phase or looking for someone to speak to – so much of the advice process is commenced online anyway,” she said.
“Using technology to automate the advice process for at least the basic advice needs around superannuation, insurance and retirement income is a massive opportunity.”
Ms Colley noted that in the current investment environment, with returns edging lower, the value of traditional advice is being questioned.
“Certainly, lower investment returns have given a greater focus [to] the cost of advice,” she said.
“When your returns are more like two, three, and four per cent, and you’re paying 25 per cent of that to your financial adviser, I think that questions the value of an ongoing advice relationship.”
People are in the future more likely to seek traditional advice for specific “trigger events”.
“Fewer people will engage in an ongoing basis with a financial adviser, but I think possibly more people will see them when they have a trigger event,” she said.
If people have access to an online automated alternative, this will likely take the place of an ongoing traditional advice relationship, Ms Colley concluded.
I looked at trying decimal and it is a long way from being a viable alternative to a CRM, let alone an alternative to advice !!
The only barrier to replacing traditional advice is that it cannot engage in face to face relationships. That is a pretty significant barrier. Good luck. You could use this model to take over the world – next will be accountants,followed by lawyers and then the medical profession. People are overated aren’t they. All you need is a lap top and internet connection. And when there is a market correction, design an application to create empathy- delivered via robots – now that is a world that we should aspire to.
When will one of these promoters of automated advice explain their actual advice process and how that process will comply with the regulatory requirements of the ‘safe harbour’ and acting in the client’s best interests?
I am becoming increasingly tired of reading how people will seek “advice” from automated solutions. Let’s get one thing absolutely clear. What you get from an “automated solution” is INFORMATION! If you want ADVICE, in other words, should I do A or B or a myriad of other issues that clients have to contend with in their financial lives, you can only get that from a human. If you have a business model that only helps clients make buying decisions, as opposed to offering them strategic advice, then Ms Colley is correct; you have a BIG problem!