In the UK the advent and development of Robo-Advice has been slow to take shape and, as of today, slow to take off. But make no mistake, it will.
There are many aspects of Robo-Advice which make perfect sense and are attractive.
If advice processes and systems can be made sharper, quicker, better and, in some cases, cheaper, the technological improvements will benefit the consumer. This is to be welcomed and at Penguin Wealth we will be looking to ensure this progress is something we work with to help our clients.
However there are going to be limitations around the robotic alternatives and dangers around the electronic and computerised solutions.
We wish to outline where one of the major problems will most likely show up.
One of the jobs of an adviser or financial planner is to sell concepts to their clients.
The word ‘sell’ is often thought of with negative connotations of arm twisting or forcing inappropriate solutions or products onto a reluctant ‘buyer’.
This is not how this works. Our client relationships are not built on a traditional buyer and seller basis. They are built on a deep understanding of our clients’ circumstances, requirements, and lifestyles and, crucially their desires and goals. The relationship is, in effect, a professional partnership.
The relationship has substantial human aspects, which we think will be very hard to replicate with a non-human alternative (e.g. a robot).
Many people, quite rightly, point to the medical profession and at the rapid development of robots diagnosing patients with more success than doctors. If this can be made to work then why can’t other areas of diagnosis, such as financial needs?
Doctors may find, initially, the robotic diagnosis as a threat, but surely it will become clear that it is no such thing and the doctor/patient relationship can become stronger. There is so much merit in the simple human interaction with the doctor using the robotic diagnosis as part of their general care approach with their patient, who will gain much from continuing with the human part of the relationship as well.
The robotic solution, cropping up in more and more industries and sectors is not a challenge or a straight alternative, but something that can enhance the services offered, solutions and outcomes.
The airline industry has used this approach for years, with planes being flown by human pilots and automatic pilots ‘sitting’ side by side.
In the financial and advice sectors one of the main areas of robotic development will be for people seeking advice around how best to protect their families.
An individual, or couple, will be able to access a Robo-Adviser and get help/advice in sorting out their family protection needs, such as life assurance, critical illness cover, power of attorney, trusts and Wills.
These Robo-Advisers will be smart.
They will be able to interact and chat, work out solutions and suggest alternatives, they will be able to assess the best options, make presentations and offer different outcomes for the consumer to choose from.
However they won’t have empathy, they won’t be able to have a normal conversation, which may go off at tangents (and those tangents can be important), they won’t be able to develop non-verbal communication, such as eye contact, they will be programmed to react and deal with a consumer in a, well, robotic fashion.
And this can be neat, it can be efficient, it can be precise.
However, it will also be restricted. As said earlier, they will not be able to sell concepts, or certainly not as well as we can.
When it comes to protection, for example, we find that our key job is not persuading anyone they need to protect their families or make sure their liabilities and future income are covered. Our main task is to outline and sell the concept of more cover and integrating the protection aspects. Discussing the wishes and the aims, which may change as a result of that discussion.
We spend time with our clients properly understanding their lifestyle and wishes, when we do this we find that the answers to questions in the early meetings change over time as we discuss with them, in greater depth, their true wishes and goals.
In other words, throughout the meetings, discussions and relationship, as it develops and builds, we help clients change their answers to certain questions.
In the area of organising plans to make sure an individual is fully protected and their families properly covered, the extent and nature of the best solutions change as we explain concepts and alternatives and we develop the relationship.
Many of our clients employ the use of trusts in their financial planning, but it takes time to work the reasons why trusts are such an appropriate solution.
This is where the combination of various human elements and skills makes a difference.
A Robo-Adviser is likely to ask intelligent questions, work through the answers and then present solutions, but they will not recognise when the answer may need to be challenged and how to make that challenge in an empathetic fashion and then to chat through the alternatives.
The simple nature of a truly successful relationship is often embedded in the very things that are NOT robotic and cannot be replaced electronically.
It is our intention to use robotics, as they evolve in the future, in a proactive way to make our work ever more efficient and beneficial to our client. But make no mistake as far as we can see it today, the robotic advice alternative will have no way of building a deep adviser/client relationship.
It is that relationship which makes the ultimate difference.
Whether you are approaching retirement or already retired, we can help you put a robust financial plan in place to make sure that you don’t run out of money. If you’d like to find out how, get in touch with us to book a no-obligation initial discovery meeting – at our expense! Call 02920 450 143 or email firstname.lastname@example.org.