Robots resuscitate financial planning in Australia

The reality is that 80% of Australian’s have never seen a financial planner and have no interest in buying the products they sell. But technology is filling this tremendous market gap and helping the industry engage with more clients.

Robo advice has been around for a few years now, and its original promise was to deliver investment advice without leaving your computer.

You would put in your profile and tick a box saying your strategy was “aggressive” or “defensive” and then wait for the answer.

The result would be instructions on how to allocate your assets between shares, fixed income products and some newer synthetic Exchange Traded Funds (ETFs) which give an investor exposure to everything from other market indices to exotic commodities.

In this early incarnation, in Australia at least, there was very little interaction. A client would click and wait, and if they wanted the advice, they’d reach for their credit card.

It led to predictions of the demise of the financial planning industry, and it couldn’t have come at a worse moment.

Scandal fallout

The industry was under immense pressure from revelations of misconduct at a Royal Commission appointed by the Government.

So, converting the 80% of Australians without financial advice seemed more of a pipe dream than ever given the massive trust deficit.

A few years on, and the model is changing and for several reasons. One is that the business model for the advice industry is evolving, and robo and human advice are co-existing within the same service offering.

So, instead of threatening the financial advice industry with extinction, robots are now helping save and transform it.

Scaling advice

One issue for the financial advice industry in reaching more clients has been the cost of servicing at scale.

Robo advice works as an initial contact point as potential clients do their research. But once they reach a point in their engagement — and they are serious rather than being ‘tyre kickers’ — this is when the human adviser steps in and takes up the customer journey.

This both cuts down the cost of delivering advice and puts clients in charge of the initial contact.

Everyone knows there’s nothing worse than making a casual enquiry and then having a salesperson swarm all over you, so putting the robo piece first puts the control in the hands of the client who can then decide to proceed if the initial contact and information is compelling enough.

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Source: Robots Resuscitate Financial Planning in Australia | CDOTrends