Technology seems to be changing most aspects of our lives and financial advice will not be immune. The predicted outcomes depend on which of the big consultancies you fancy as best able to see into the future.
McKinsey is talking about a virtual advice market where planners in hubs link with customers via a range of digital and video tools. Boston Consulting Group sees the data-crunching capacity of computers as able to provide both lower-cost and lower ‘conduct risk’ advice from large vertically integrated players.
The London Financial Times this week equated the coming change to the way online music had pushed High Street record stores into oblivion. In this piece the banks and wealth managers’ response to the much hyped and low-cost ‘robo-advice’ which offers no human contact is analysed.
“The new ‘virtual advice’ model retains the high level of personal service most consumers value from their financial adviser while leveraging the power of digital communication to deliver advice services from a distance,” Daniel Gourvitch, a principal at McKinsey in New York is quoted as saying.
He talks about virtual advice hubs which provide productivity gains, allow many more meetings and mean admin and operational tasks can be centralised.
The piece continues: “Regulators’ focus on the quality and costs of financial services supports the creation of hubs where the monitoring of advisers’ activities is more straightforward.”
Another side of the argument can be found in Andrew Main’s column in The Australian on Tues June 23 with Boston Consulting Group partner Andrew Dyer. He says technology will give the large vertically integrated advice operations a chance to reduce the ‘conduct risk’ of planners exploiting the system and customers for their own benefit.
“There is no reason why a whole lot of wealth management advice can’t be processed via something like IBM Watson, a cognitive computing giant that’s being tested by the ANZ Bank and others. It’s more effective at diagnosing medical conditions than a standard doctor is,” he is quoted as saying
“You can see a lot of advice being delivered electronically, which takes out much of the conduct risk in those organisations.’’
So two different consultancies with two varied takes on what how technology can change the ways advice is delivered. The question of course is which, if any, the customer may prefer.
By Christopher Zinn, Communications & Campaigns Director, Adviser Ratings