By Jayson Forrest
As technology continues to reshape the advice landscape, a new wave of fintech is helping advisers to keep their clients’ goals at the centre of the advice relationship. Jacqui Henderson (Advice Intelligence) explains how this is being done.
The rise of artificial intelligence (AI), coupled with the rollout of more intuitive technology, is enabling much greater personalisation of the advice process, and will invariably have a profound effect on financial planning over the next decade.
This was one of the bold predictions from Jacqui Henderson - Founder and Chief Executive Officer of Advice Intelligence - an online goals-based financial advice platform. Jacqui anticipates a great deal of opportunity and excitement ahead for the financial services industry, as technology plays a greater role in supporting advisers and advice businesses.
Speaking at the IMAP 2023 Virtual InvestTech conference, Jacqui says that moving forward, the industry needs to look at how it can empower consumers to interact more seamlessly and flexibly with advice and wealth services. And that’s where technology steps in.
“As an industry, we have high barriers that make it difficult for consumers to engage with our services. We have a complex supply chain, with a lot of compliance obligations,” she says. “This makes it challenging for consumers to gain easy access to wealth services.
“This is where digital technologies, like smartphone apps, can play a significant role. This type of technology can bridge the gap between today’s consumer and the financial services industry.”
According to Jacqui, consumers expect digital technologies to be a significant part of any service offering. She refers to industry research that shows consumers want their financial plans to be delivered via smartphone apps and be data driven, so they have convenient on demand access to their investments and cashflow, and which can track to their life goals as part of their financial plan.
Jacqui adds that the research confirms that consumers want their financial advice delivered collaboratively and in real-time. This includes collaborative planning tools, interactive client-facing scenario modelling, and instant digital financial plans.
“We’re increasingly seeing the digitising of advice, where wealth businesses are moving into the digital world. This includes digitising the wealth process, automating client data capture, through to automating compliance obligations to make the financial advice process much more efficient and productive.
“With 62 per cent of Australians still having unmet advice needs, digital solutions are enabling wealth businesses to engage more efficiently with the mass market, and at a price point that is cost effective to consumers,” says Jacqui. “We already know that smartphone apps are changing the way Australians want to consume financial advice and investment services. So, we need to look more closely at how we can digitise advice to make it more accessible and consumer-friendly to people.”
Jacqui Henderson of Advice Intelligence
With 62 per cent of Australians still having unmet advice needs, digital solutions are enabling wealth businesses to engage more efficiently with the mass market, and at a price point that is cost effective to consumers
Having tools that support the advice conversation, while enhancing the adviser’s value proposition, is incredibly important. As technology continues to improve and is rolled out, we’re going to see more advice businesses adopt this hybrid service
A changing advice landscape
According to Jacqui, technology is increasingly assisting advice businesses to develop an omni-channel service offering, where advice businesses can become more of a hybrid model that uses tech tools as an extension of the human adviser. Advice is delivered in a hybrid form that brings together both human and technological collaboration, where artificial intelligence (AI) and machine learning is utilised to calculate the many thousands of permutations and various scenarios to determine what strategies are best for a client.
“Having tools that support the advice conversation, while enhancing the adviser’s value proposition, is incredibly important. As technology continues to improve and is rolled out, we’re going to see more advice businesses adopt this hybrid service.”
Examples of omni-channel service offerings include: ‘Phone and chat’ - a channel that enables advisers to deliver their services digitally and online; ‘Self-directed’ - enabling clients to do simple advice strategies in a digital setting, like optimising their contributions; and ‘White-labelled tools’ - embedded tools on an advice business website, like interactive discovery tools.
For advice businesses journeying down the digital route, Jacqui identifies four types of wealth models currently in play in the advice landscape. These are:
* Digital Product Advice - a product-led advice model, comprising of providers with a B2C distribution model and a service offering largely designed for automated investment and/or super products. They provide a self-directed online tech offering to clients. Example providers include Six Park and Stockspot.
* Hybrid Product Advice - a product-led advice model, comprising of providers with a B2C distribution model and a service offering largely designed for automated investment and/or super products.They provide a hybrid of tech and human interfaces for clients to call or live chat with. Example providers include Six Park and Stockspot.
* Digital Personal Advice - a digital personal advice model, which takes into consideration a client’s financial position and life goals, providing scoped advice as a self-directed, low-touch experience, like simple contributions. The tech provider enables an advice business to offer a self-directed digital advice offering to clients. Example providers include Advice Intelligence (B2B advisers/licensees) and Otivo (B2C).
* Hybrid Personal Advice - a hybrid personal advice model, which takes into consideration a client’s entire financial position and life goals, providing comprehensive or scaled advice as a high-touch hybrid of human adviser and tech experience. The tech provider enables an advice business to offer a hybrid advice offering to clients. Example providers include Advice Intelligence (B2B advisers/licensees) and Otivo (B2C).
“We will see more digital personal advice tools emerge over the next few years, where technology will be able to support the digitisation of advice into a pure digital experience for clients. As technology continues to advance, there is a lot of innovation happening in the industry, which is enabling new business models to emerge,” says Jacqui.
We will see more digital personal advice tools emerge over the next few years, where technology will be able to support the digitisation of advice into a pure digital experience for clients. As technology continues to advance, there is a lot of innovation happening in the industry, which is enabling new business models to emerge
Goals are simply the tangible outcomes that clients are seeking advice around. Having goals at the centre and beginning of the client conversation is very important because it’s what consumers actually care about
Goals-based digital advice
Sitting at the heart of any advice relationship are the goals and objectives of the client.
“We know that clients care more about their retirement goal, or sending their kids to school, buying their first home, or an investment property. Goals are simply the tangible outcomes that clients are seeking advice around. Having goals at the centre and beginning of the client conversation is very important because it’s what consumers actually care about,” says Jacqui.
Tailoring client goals into the advice process has a number of benefits. These include:
* Tracks investments to the target outcome;
* The portfolio can be tailored to the client’s goals;
* Performance is measured against the client’s goal achievement, rather than market returns;
* The goal’s time horizon, priority and target outcome is factored into risk and asset allocation;
* Better compliance - links goals to the investment recommendations; and
* Strengthens client engagement and personalisation.
“Therefore, we need to look at how we can leverage goals-based technology to maximise our productivity, strengthen client engagement and relationships, and help optimise the advice value proposition. These are the three key pillars in which technology can help support advice businesses become more efficient, more productive, and really engage clients,” says Jacqui.
In terms of the roadmap for goals-based digital advice, Jacqui believes that over the next 12 months, advice businesses will move to a more automated hybrid adviser model - a hyper-personalised model, where advisers and clients can collaborate via digital planning tools with live scenario modelling. This model will enable advisers to provide digital financial plans that are driven by live investment and cashflow data, which links the advice to the client’s life goals.
Jacqui is confident the adviser model will continue to evolve, saying that the next iteration (in about three years) will be a digital and hybrid adviser model.
She explains: “Machine learning will be used to automatically optimise advice strategies, investments and goals based on client data over time. Clients will be able to track their own data driven financial plan via their smartphone app, and advisers will be able to offer an omni-channel service offering by delivering advice via the web, phone/chat, face-to-face, and virtual platforms. Technology will act as another conduit between advisers and clients, and help to make the relationship a little stickier.”
Looking ahead, Jacqui believes technology will better enable advisers to optimise and clearly articulate their value proposition by enabling them to demonstrate how their advice will put the client in a better overall position, while allowing them to justify their fees.
About
Jacqui Henderson is Founder and Chief Executive Officer of Advice Intelligence. The session, ‘Keeping client goals uppermost for them and you’, was moderated by Fraser Jack - Founder of The Cyber Collective.