AI vs I in financial advice

Robo-advice will transform the existing delivery model for financial advice. But the idea that these 'robots' will simply replace financial advisers isn’t the likeliest outcome.

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We already know how robo-advice is emerging around the world but it’s important to know the real ways it will impact business and client experience.

"By failing to meet the expectations of an evolving client base, advisers who haven’t integrated automation risk being left behind.”

Perhaps the greatest impact will be on price.

“With robo-advice, investment in a globally diversified portfolio of exchange-traded funds can cost $A50 a year, including brokerage,” says Patrick Garrett, CEO of robo-advice firm Six Park Asset Management.

This reduced price for advice will be matched by much faster and more efficient systems, meaning advisers can work at scale.

With robo-advice, multiple interactions are streamlined and advisers can target different customer profiles. What may have taken weeks in the past could be instigated instantly and remotely. Investment portfolios can also be finalised in one brief online session.

“By investing in technology and digital marketing, operational efficiencies are created to lower operating costs which will not only bring down fees but also expand potential client base,” explains Garrett.

“Fee compression has already started in the wealth-management space and it's going to continue. By investing and redefining their business model, [advisers] will also be able to engage with a broader audience.”


Potential reduced cost isn’t the only advantage for clients. Digital platforms make sense for those who may not necessarily want a full suite of services.

Sophisticated investors understand the benefits of investment analytics and the automation of services such as paperless onboarding. Clients who cherry-pick products and dictate levels of engagement will embrace automation and lower fees which don’t eat into investments.

Digitising the delivery of advice means faster, more convenient applications, which is a must for millennial clients who are used to immediacy and transparency. By failing to meet the expectations of an evolving client base, advisers who haven’t integrated automation risk being left behind.

Robo-platforms provide transparency making it easier for investors to see gains and losses, monitor their performance, and keep track of their dividends in real time from anywhere -something clients have come to expect.


Robo-advice is disrupting the advice sector but personal contact, support and individualised holistic plans will still set humans apart, generating demand for their service.

People provide empathy, support and reassurance which are of value to clients. Garrett believes technology-driven investment management “frees up time for advisers to spend on value-add activities, like estate planning and more complex financial advice, where the human interaction is absolutely required”.

A 2016 survey on technology and wealth management focused on millennials and generation X, found 60 per cent of mobile-savvy millennials still think face-to-face meetings are crucial. Other research indicates high net-worth individuals see humans as key to the advice process.

While clients are clear in their interest in personal financial advice, there’s a few areas robo-advice can assist advisers in in the short term.

Increasing regulation can be neatly automated using technology, adapting to regulatory requirements when they come to pass.

Algorithms devoid of human biases and emotions may counter consumer distrust of personal advice by automating parts of the product recommendation process, making objectivity clear.

With regulation, training and education requirements becoming a priority for local advisers, “any inefficiencies in their business will become more painful,” says Garrett.

Perhaps the single biggest advantage of robo-advice is the efficiency of the advice process.

The challenge will be combining the benefits of technology with the many advantages an experienced adviser can bring.

By building digital capabilities to engage with specific, targeted clients in a timely and meaningful way, advisers can build a more profitable practice.

Louise McCabe is a freelance journalist.

This article was originally published on ANZ’s APEX website

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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