Thursday, April 30, 2015

Robo what ?

It feels like the industry is in a 'Robo advice' frenzy at the moment. Fears of disruption are ever present, threats to the status quo, low cost investment offers, etc. Naturally many look at parts of the industry structure today and see it in a new light, but what actually is that 'new light' and what is the perspective and context around what is going on ?


I notion that the 'new light' is the trend hitting wealth management that has been impacting other industries for the last decade or more, that is of consumer empowerment. Consumers that are connected to the internet, have access to massive amounts of data, have access to powerful tools and technologies to filter such data....to do what ?


I guess fundamentally the blend of information and tools is equipping consumers to be able to compare and contrast investment offers and their 'suitability' for consumers like never before. One could argue that in many cases, the investment solutions are great for the consumer, with benefits such as lower costs, more active communication to clients, a confident sense of 'suitability' etc.


So is this the end of the wealth management industry ? Is 'Robo Advice' going to replace 'Advisers' ?


I suspect that the answer, like all periods of change and evolution, is 'Yes' and 'No'.


Yes, because with a higher level of consumer education, combined with access to some great investment sites on the Internet, a portion of that consumer base will see benefit in using the 'Robo Adviser' sites and negate the need to see an 'Adviser'.


But lets now compare this to Amazon.com and what happened at the turn of the century. Did some bookshops disappear ? Yes they did. Have other bookshops remained, others started and prospered ? Yes also. What happened is that in the first round of culling, many service orientated consumers voted with their 'feet' and either went to bookshops where there was either a value added service, or they just liked being there. Many consumers who just knew what they wanted and were prepared to wait a day or two went on line and felt that they got a better deal at Amazon. The bookshop market one could argue split into 2, value added boutique and mass volume on-line. Also, subsequently the boutiques worked out a way to use other services to get to the mass volume title lists also so they could compete on product range.


And this is what I suspect will happen with investments and wealth management, which introduces the 'No' answer. The 'No' is because a lot of what is being called 'Robo Advice' is not actually really 'advice' per se, but more just about filtering on a rules based engine to find an appropriate product. If this was all that 'advice' is and was, then I suspect that 'robo' would replace traditional advisers, and I suspect in a section of cases it will.


But back to the developments in the bookshop industry....Is it likely that the boutique advisers, who can demonstrate to their client base that they add more value than just selecting a product or asset allocation mix, remain sustainable ? Sure, if they can demonstrate the value. And like the boutique bookshops, they may actually end up using the more automated lower cost sites and engines to actually fulfil the product to the client (that's what they do when they go to the backroom as say it is on 'backorder'). The key point here is about 'value'. Access to investment products in a world of broad availability of everything is unlikely to be a sustainable differentiator. However customer service, dealing with peoples emotions, explaining things to their personality, understanding their context and mindsets, dealing with investments in the context of their financial and tax affairs, I would suggest will always remain a value added service that many regard will never be replaced by electronic methods.


The key point here being that value is not judged by the consumer, not the provider, and that it is often difficult to define, articulate or measure when it is about each individual. Personalisation around the consumer in many different forms is the key to sustainable service and value.


One thing is for sure is though is that with such context, a lot of the 'Robo Advice' is then clearly positioned not as 'Robo Advice' but as 'Robo rules and customer servicing', which one would argue that like Amazon.com and the many on-line offers in every industry, is just necessary to be competitive. It may also suit a customer segment that knows what they want and are happy engaging this way.


However the big question then comes is what does a 'robo' channel do when the 'robo' channel is  fully served has saturated that customer segment. Naturally, like I am lead to believe that Amazon.com is doing in buying up physical stores, in investments, it means hiring more 'Advisers'.


So what I think we are seeing here, is more a refinement here of the multiple engagement methods, that have evolved in many other industries, happening in wealth and investment management. My suspicion is that in 5 years time, like most shopping brands today, most wealth and investment brands will have 'Robo' as a service line, as well as advisers, and probably a few other ways such as chat, on-line interactive etc. for customer interaction and engagement.


So 'Robo', like buying stuff on the Internet, is not likely to be so much as a disrupter, but become an essential way for all brands to interact with a segment of their client base, that ultimately all players are likely to need. Naturally we anticipate then a demand for packaged 'Robo' technologies on a 'buy' vs 'build' basis, which we are Financial Simplicity are well prepared for. Come and talk...




Tuesday, April 21, 2015

New era of Retirement (and Investment) Solutions

We are just launching our new era of technology solution to support what we see as a new era of retirement and investment solutions.....


What's new ?


Well, a few things are happening around the world:

1) that it is increasingly being recognized that many consumers are asking more questions about the fees that they are paying for advice and investment services, and assessing value for money. In fact not only is it consumers, but regulators are onto this also and there have been some high profile cases recently where providers are being caught out. Ultimately it is being recognized that across the investment industry, it is moving to you have to be doing something ongoing to get paid on going.

2) Services are getting personal. In reality if a service isn't personal, it looks rather like a product, which is a problem given the above. And personal means that it means something to the person, which is most likely to be different for each investor depending on their circumstances


3) this is encouraging those who recruit clients to introduce an ongoing service into their proposition, which in many cases is about portfolio management as opposed to product selection


4) regulators globally are reconsidering the terms of retirement solutions in terms of the mandating of annuities, timing of releasing retirement pots etc, introducing more options for consumers and their advisers


5) whilst people who are accumulating assets may be regularly seeking to increase their investment or retirement pot, increasing numbers of people are relying on drawdown of capital to fund retirement or lifestyle needs in a low interest environment


6) this is encouraging a new era of investment / retirement solution that combines active portfolio management, personalized to each individual, to their level of investment sophistication, with the cash flow realities of monies being placed into and withdrawn from the investment and retirement pot


Now combine this all together, recognise that everyone's timing and cycles of cash flow adjustments is likely to be different, the assets may be held in multiple platforms for different investment types, multiply by thousands of members / investors, and overlay the increasing demand from regulators to ensure that this all operates squeaky clean....


If you are recognising this problem, and looking for a solution, I'd be happy to talk.










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