Bods beat bots in the ‘art’ of advice: global planner survey

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(pictured: Bruce Moss)

by David Chaplin

Flesh-based financial advisers remain confident of fending off robo-competitors despite the gathering pace of the digital revolution, a new global survey has found.

According to the Financial Planning Standards Board (FPSB) 2016 member survey, most financial advisers saw robots as potential servants rather than the new overlords.

“In response to FPSB’s 2015 survey, financial planners said automated advice tools should not be viewed as a replacement for human interaction with a client,” the FPSB report says, “and they’re sticking with that.”

However, the FPSB, which represents the Certified Financial Planning (CFP) mark outside the US, says as the fintech trend takes hold human advisers would “have to demonstrate the value add of holistic planning”.

“While the majority of financial planners considered that the interpersonal (‘art’) aspect of financial planning cannot be easily replicated by technology, some financial planners appreciated fintech’s ability to raise the importance of analytics-based recommendations to balance those made through intuition or ‘gut feeling’,” the 2016 FPSB report says. “The fintech applications will compensate for the financial planner’s emotions, biases and conflicts, and the hybrid automated/human model will provide for better advice and better consumer outcomes.”

The survey, of about 1,700 CFP-holders in 29 jurisdictions (including Australia and NZ) found that respondents “overwhelmingly” felt direct-to-consumer robo-advice services had yet to find a sustainable place in the market.

“To date, fully automated advice platforms have had limited success or have yet to gain traction,” the FPSB report says. “In territories where automated advice tools do exist, they’re often limited to investment advice and portfolio management functions, and sometimes life insurance.”

Earlier this month head of UK fintech firm EValue, Bruce Moss, told the Financial Times Adviser publication the majority of robo-advice systems would “disappear” in a few years.

“It is easy to underestimate the difficulty delivering an engaging experience for consumers while at the same time satisfying regulatory standards,” Moss told the FTAdviser.

However, he said both “pure” robo-advisers and “hybrid” systems that integrated with humans would develop sustainable business models.

The FPSB survey, too, found human advisers were optimistic that fintech solutions would ultimately enhance their businesses rather than destroy them.

“If automated advice providers and platforms shift focus from ‘direct to consumers’ to being more of a support platform for bionic financial advisers, it will support the global financial planning community’s view that tech-augmented, human financial planners and their clients will be the ultimate beneficiaries in the fintech ‘arms race’,” the report says.

Most respondents said robo-advice could probably help them engage with younger and mass-market clients more efficiently.

According to the report, fintech could help advisers across a range of processes including: “data collection, speeding up client onboarding, data aggregation, checking calculations and allocating investments; delivery of documents; updates on real-time market changes; portfolio construction and asset allocation.”

At the same time, older and wealthier clients (or those with complex financial needs) were unlikely to defect to digital, the survey found.

The FPSB report says financial advisers, and their representative bodies, need to engage with regulators to ensure robo-advice is defined and policed consistently.

“Stay up to date on fintech developments in your territory, and monitor developments and trends in automated advice and fintech innovations around the world,” the FPSB survey advises.

New Zealand’s first fintech conference, Finnotec, has been set down for November 10 at Auckland’s Hilton Hotel with a 25 per cent discount offered to those who register via Investment News NZ. Contact:

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