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Comment: Why advice firms need to use tech to collect data

Comment: Why advice firms need to use tech to collect data

I have lost count of the presentations proving how millennials and generation X communicate differently. While I believe the death of face-to-face advice and the rise of the robots is much overhyped, there is still something to be said about this shift.

There will be a significant increase in the use of robot/artificial intelligence-assisted advice. It will not replace advisers, but it will improve fact-finding for clients and increase the sophistication of data that firms hold.

The gathering of hard facts as part of an IFA’s ‘know your client’ process is time-consuming. It is also pretty dull for both the client and adviser.

Open banking and the general data protection regulation have already driven the acceleration of automated access to client data held in various registers and back-office systems. These bits of kit already exist, and are being increasingly integrated with other technology, such as back-office systems and product research.

This kit, if wisely introduced, allows clients to update and improve their own ‘know your client’ information. This includes assets not controlled by the adviser: property, jewellery and ‘secret stashes’ of cash, for example.

They can also do much of the income and expenditure analysis for the adviser.

They can populate cashflow tools, notify advisers automatically of expenditure outside the norm, and produce daily updates of how a client is progressing towards their financial goals. And this is all with no more effort than the client’s permission.

But a robot cannot tease out of a client their hopes, fears and dreams. Nor is a robot humane enough to interpret complex physical responses, such as a spouse rolling their eyes at their partners’ misrepresentation of their dreams or a blatant lie.

Even if this were possible, the robot would still have to document all of this into plans containing meaningful objectives for its individual clients.

Would you feel confident to act on and implement the robot’s advice? I would not. Most clients still want confirmation from a human that it is OK to press the button and invest, even if the technology has done much of the legwork.

Use IT to your advantage

But technology can be put to good use in other ways. Software that can learn best practice, and understand individual processes, could enable risk consultants to engage much more quickly in the activities that firms value. For example, how to make their businesses more efficient, more profitable, more client focused, more fun and more valuable.

Is it possible for artificial intelligence to accurately examine huge files, anti-money laundering verification, capacity for loss, income/expenditure and other facts relevant to the delivery of good advice? If it is, it would leave the human adviser, consultant and file reviewers to focus on suitable solutions that are likely to meet the goals of clients and businesses.

In the case of file reviews, which are a necessary part of any risk mitigation strategy, too much time and money is currently spent trawling through documents. All too often, it only results in an ‘unclear’ grade with a host of remedial action, which artificial intelligence might have taken mere seconds to establish.

Advisers can then interpret this more sophisticated data to arrive at plans and actions that will transform lives and businesses.

Best of both worlds

Obtaining good financial advice for people with anything other than very basic needs will always require an adviser being invested in a client. But without an increased use of artificial intelligence to accomplish generic tasks, the sheer volume of regulation and associated risks is only going to make advice less accessible.

Advice businesses that do not use technology to gather data and achieve consistency and accuracy will be too costly and slow.

Now is the time for advice businesses to challenge how they operate, how they deliver value and how technology can help. A seamless process, using the best of human abilities and the best of technology, offers huge opportunities for the financial planner.

Tony Bray is head of business development at Threesixty

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