I'm deeply frustrated by headlines about robo-advice at the moment. Any analysis which sets up the discussion as a binary either/or is just plain wrong. Looking at a channel choice as "Robo OR Human adviser" is simply wrong.
This reminds me of the trend in the 90s for "Internet Only" banks. Almost none of these exist today. Most successful banks offer multi-channel support for their customers. Most successful technology companies do too: I can buy Microsoft products online, in a store, and over the phone. I can get support for them that way too. I may never know when services like online chat to troubleshoot technical problems are provided by a human, or AI.
But it isn't just big businesses that are changing. Small ones change too. Our family lawyers used to be incapable of dealing with us by email. Now they can. Most suppliers prefer payment using online banking, setting up appointments by text and email, and using apps to help with product selection. Which brings us back to advice. It is advice, in a way, just don't call it robo-advice okay. Advisers will be as likely to use IT to enhance their provision of advice and customer service offers as big business.
Here is the story of one family's story about how private medical insurance was essential in diagnosing and treating colon cancer. 'Private medical insurance is the only reason my husband is still here, as at 36 years old he was too young to qualify for public screening programs.' Click here to read more.
This story about a denied claim looks to feature questions of insurable interest. Link.
Here is an interesting article by Andy Symons titled 'What if financial services had ingredients on the product’s packet?' 'Whether it’s for ethical reasons, an allergy or to stay true to a diet, checking the ingredients label when out shopping at the supermarket is now as common as having a bank account. But what if banks were required to put the ingredients on the labels of their products and services?' Okay, that's not strictly about insurance, but it is topical. Are you okay with your KiwiSaver investing in the shares of manufacturers of cluster munitions?
We have been gathering feedback from advisers since we launched our Needs Analysis tool on Quotemonster a couple of months ago. We are due to make a number of changes to the system based on the feedback given which will go live over the coming weekend.
Some of the things you can expect to see are changes to the layout of the screens, a new Settings screen to select defaults for certain things, as well as additional questions relating to KiwiSaver.
Be sure to log in to Quotemonster next week to go through these changes - if you haven't checked it out yet here is a link to how to find the tool.
Thanks to the speakers at the breakfast session this morning on robo-advice. Paul Baldwin, Derek Grantham, Royden Shotter, Barry Read, Binu Paul, and Stuart Auld, and moderator Peter Lee.
Barry Read's and Binu Paul's comments about the actual use of robo-advice systems by customers were in sharp contrast to the expectations of use by some of the other speakers.
There was some confusion in definition. Some people plainly meant different things when they talked about 'advice' and more clarity came when someone - probably Barry - talked about the difference between full financial plans (rare, later candidates for robo) and the definition of financial advice in the FAA today.
Lots of talk about the appeal of robos being cost-based which was thoughtfully disrupted by Derek Grantham quoting from some research (qualitative, from a focus group) about Millennials talking about making fund selection decisions.
Royden Shotter commented that although there is a lot of variation in individuals and circumstances it is worth remembering that there isn't a lot of variation in strategies. Likewise good to note Binu Paul quoting Bill Gates comment that we tend to overestimate change in the three-year timeframe and underestimate it in the ten year timeframe.
A tough definition of robo advice could be: “Can enable a compliant personalised advice recommendation to be made without the requirement for a human adviser to be responsible for the advice”. We aren't alone in choosing that definition. We think it is what MBIE has in mind when it writes about robo-advice licensing, because they view a law change as necessary to meet this definition.
On the other hand you may take the view that robo-advice is the involvement of technology at any point in a process which may result in a sale, whether that contains 'financial advice' as defined by law. We have some different terms for that - we call them 'adjacent' to the strict definition of robo-advice, here are some current examples to illustrate:
Adjacency 1: robo ‘nearly-advice’ – best example: LifeDirect, it is robo, but it is a sale without financial advice.
Adjacency 2: ‘nearly-robo’ advice – uses technology to make the adviser much more efficient at the actual advice process – we think Quotemonster, and QPR fit into this category - these are adviser tools.
Adjacency 3: ‘technology enhanced advice’. In this case the technology doesn’t play a role in working out the advice (it doesn’t capture requirements and help make recommendations) but it facilitates the process of doing that. Specialised examples include some kiosks and Suitebox.
Adjacency 4: 'robo-to-advice' which uses combinations of tools to help clients self-qualify, or complete aspects of the advice process themselves, to bring them better prepared into an advice-giving discussion with an adviser.
There is a lot of room for development of effective services in each of these areas. We are very interested in developing services for advisers in the last category.
Lemonade is the new name in P2P insurance. It has launched offering homeowners and renters cover for New Yorkers. The way in which it is P2P doesn't seem quite the same as the way, say, Harmoney, is P2P. We shall follow their development with interest, however, as we share their interest in the future. Link.
Seth Godin has this great piece on why if you are never criticised, you are probably hiding. Seeking to disappear into the mainstream will not create a fabulous business. This happens a lot in our industry. Pretending there is one single orthodoxy in financial services, and being the most dedicated observer of that path, isn't going to create the business that you or your clients really want.
Forbes has this excellent review of HelloWallet, a Fintech solution for employers keen to help their staff with financial well-being. This application works by education and reminders - Forbes uses the term 'nagging' - to help staff increase their savings rates. Link. HelloWallet is a subsidiary of Morningstar Inc.