Raging against the machines

21st July 2014 by The Harried House Hunter

Coming in to work this morning I was witness to the admittedly not uncommon sight of a black cab driver and a cyclist having a bit of a dust-up!  What did strike me though was the cyclist kept gesturing to his helmet whilst remonstrating with the cabbie.  The helmet had a camera attached so I guess the cyclist was challenging the driving with his potential to supply video evidence.

I find it incredible just how much technology is all through our lives now, some of us watch two screens now with the TV and a tablet in front of us (guilty!), we are wearing fitness trackers on our wrists and the sheer omnipresence of social media has got everyone from the very young to the very old engaged and communicating.

So what about financial services – are we keeping up or are we raging against the machines?

I attended a conference recently where one of the speakers was the founder of one of the new generation of direct to consumer investment websites.  It was an excellent presentation and in his opinion the days of the face to face adviser are very definitely numbered.  He is convinced that financial advice and investment management can all be achieved without human intervention once the system is built, in place and delivered to a willing population.  He clearly thinks we will go the way of the costermonger and the stevedore very quickly and we may not even realise we are already on the way out.

Similarly, the financial watchdog, the Financial Conduct Authority, whilst not exactly admitting to an advice gap (where there is demand for advice but not enough advisers to meet it), have recently announced Project Innovate, which, as the title suggests, is designed to find more innovative ways of delivering advice. They have cited it as “one of the most important pieces of work currently emerging at the FCA, a project to help support industry innovation: from smaller start-ups to mass market with new models.”

The FCA appears very keen to get the public re-engaged and discussing their financial security and futures in interesting, modern easy to use ways and this is to be commended.

Fund manager Schroders has also just invested heavily in another on-line investment offering and other groups are working hard on their D2C propositions so there is obviously a momentum out there for this type of thinking.

I have to say there is a strength to the ‘technology will solve all’ argument which can make it seem very compelling.  Who amongst the public really wants to spend endless hours of wading through reams of pre-commitment documentation with an adviser or planner before even actually getting to the point where they can actually talk about what really concerns them financially?  A few key strokes and a bit of on line credit card details seems just the ticket.  Virtually everyone is now buying on-line, Amazon, Apple and a host of other sites have got us accustomed to virtual research, appraisal and purchasing.

Interestingly, using these systems we can also share our purchase experiences with our peer groups.

So, upon reflection, do I think that face to face advice will go the way of the dockyard worker?  I suspect not.  I do think that technology will play an ever increasing role within financial advice.  We have already moved from being the gatekeepers of knowledge to more of a consultancy role, assisting clients filter, digest and act upon knowledge and information which is readily available on- line and elsewhere.

Investors’ finances are rarely so simple that they just turn up with a cheque – at least in our experience.  They typically turn up with legacy policies, they bought or were advised to buy years before, and investments which need research, rationalisation and discipline.

It is difficult to do this purely on-line.  Also, in our experience many investors want the comfort and technical expertise that a good adviser will bring.  Even one of the most successful on-line advice sites in the US, Learnvest, has a team of Certified Financial Planners on hand to help investors.

So, in summation, I don’t think this is a binary argument.  I think over the next few years we will see a fusion of some of the best of on-line and some of the best of face to face advice.  It is entirely likely that some investment decisions will be made by investors without advisers – more than is currently the case – but with the clever use of technology for communication and ease advisory firms should also benefit here by introducing communication and administrative efficiencies.  Banking and investment aggregations solutions, a furthering of wrap functionality and the many opportunities offered by on-line contact and facilitation should keep the investing public and the adviser in touch for a good few years yet.

So let’s not rage against the machine – let’s work with it to the benefit of our clients and the investing public.

Lee Robertson is a Chartered Wealth Manager and CEO at www.investmentquorum.com.


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