What is your advice business like?

Seth Godin, in one of his pieces describing the shift to online absolutely nails the definition of which businesses can most effectively compete with big tech, and which cannot: 

What if the work you do is:
not based on innovative or flexible customer interaction…
If it is, it’s pretty likely that you’ll be replaced by a combination of robots, AI and outsourcing.
If they can find someone or something cheaper than you, they’re going to work overtime to do so.
The alternative is to be local, creative, energetic, optimistic, trusted, innovative and hard to replace.

If your compliance process makes your business compliance-based, standardised, and repetitive... then it is turning you into robot food. On the other hand, if it is helping you deliver that business described in the last line, you are future-proofing your business. 


Congratulations to Pinnacle Life on being granted a digital advice exemption

The FMA has granted Pinnacle Life a digital advice exemption. Congratulations to Gillian Vaughan and her team, in particular Amy Cavanaugh who has been driving this project forward. From the media release:

General Manager Operations Amy Cavanaugh says the provision of digital advice will extend Pinnacle Life’s existing online service to customers, offering a flexible approach to personalised advice.

“We know our customers are busy people, so we thought about how we could provide advice in a flexible, personalised, easy-to-access way. The new digital advice platform we are developing will enable customers to make informed decisions about insurance through tailored, real-time digital advice, whenever and wherever they want it.

The Chatswood team has been privileged to be a part of this project. Our prior contributions to online processes have tended to be data services. This project is a further step forward as it has been for a personalised digital advice process. I would like to recognise Shaun Dowler, who provides data science consulting as part of our team has been particularly valuable in pushing ahead this work for Chatswood. 

The announcement says that the service will be launched later this year. 

Southern Cross invest in AI

Southern Cross has introduced a new ‘digital human’ which is powered by FaceMe. Although nameless, the adviser-bot is a novel product in the global health insurance industry. The introduction of the adviser-bot will allow it to answer basic questions which people may feel embarrassed to ask advisers. Southern Cross hope to potentially expand the role of the adviser-bot, so customers are able to better understand Southern Cross products. From InvestmentNew NZ, by David Chaplin.

Click here to read more.

Another robo-adviser goes online

Another robo-adviser has gone online. How many robo-advisers will there be? The way we phrase that question may not be helping us assess the future. Rather than define the business as 'robo' why not ask, how many advice businesses will have some advice automation in the future? Put that way, I find it hard to argue that many won't have much advice automation.

CIGNA: receives robo advice exemption

This morning has ended up being all about CIGNA, who have revealed themselves to be the third recipient of a robo-advice exemption, and the first for a life insurer. Firstly, congratulations to CIGNA, and Vince Warnock and his team who have achieved the work necessary to obtain an exemption. I know it is significant.

Robo-advice for investments has been around for quite some time. Essentially, it follows a simple path. Advertise, the client comes to a company website. The process of deciding whether investment is the right thing for this client is ignored, or whether this company is right, is ignored in this limited advice process. The questions addressed by the robot are usually: how much to save? Into which funds?

Digital advice for insurance has yet to settle into such dismal conformity - or much practical utility. It is still a confusion of ideas about what needs to meet, how to manage conflicting demands, budget allocation, product selections, and interactions with other services. Picking through these decisions requires skill in understanding both the consumer purchase process, the risks consumers face, how insurance forms part of their wider financial life, and how to make the trade-offs. In a world where we seek to make decisions that are evidence-based, data must underpin each offer and choice. Then it must all be made simple, and attractive. For every digital advice offer for insurance for the next few years, it will be fascinating to see how each resolves those issues. 

Strategically, look at it like this: in a few years most, if not all, insurers will have a digital offer. So how is your preparation for digital going?


Here are the details of CIGNA's announcement:

"Cigna Insurance receives approval to offer robo-advice

Cigna Insurance is excited to announce it’s been granted exemption from the Financial Markets Authority to offer digital or robo-advice to its customers.

Cigna Head of Marketing Vince Warnock says the insurance industry is facing a period of change, with customers expecting more from providers; and rightly so.

“This is an exciting time for us, as it gives us the mandate to ensure we’re delivering to our customers’ expectations. Robo-advice is going to change the landscape for the insurance industry and importantly give consumers another choice on how they want to receive their financial advice, Warnock says.

“This is a big opportunity for Cigna to now work on building a service that will not only help consumers but help empower financial advisors. Together this will give us a real opportunity to help solve the high underinsurance levels of New Zealanders, and make sure New Zealanders have the financial protection they need, when it’s needed.”

In its decision the Financial Markets Authority said it was satisfied Cigna’s application for exemption demonstrated its directors and senior managers meet good character requirements and had the capability and competency to provide personalised services to retail clients through its digital advice facility."

FSC Insurance Stream Update - Advice Automation

The fourth workshop in the insurance stream at the FSC Conference is a case study in advice automation. What strategies will revolutionise customer engagement? How will technology change the delivery of financial advice? How willing are we to trust advice systems? We explore putting the client first in a world where technology, regulators and advice come together.

Panel participants include: 

Edward Liebenburger, Head of Digital at Jade Software
Craig Beveridge, Customer Centered Software Design at Jade Software 

Click here for conference details.


Is robo-advice an implementation strategy? I don't think so

Michael Kitces from Nerd's Eye View has written this article discussing some of the real marketplace challenges for Robo-Advisers and the growth of robo-adviser solutions for advisers. Their view is that robo advice is fundamentally an implementation strategy, and not a customer acquisition one.

My view of digital advice is that the place where digital can be most useful is in customer acquisition, extending gradually back towards full advice-giving. That contrast could be something about the relative volume challenges of the different types of adviser we tend to focus on. Investment advisers have relatively fewer client interactions, and much more advice implementation and administrative tasks for each one. Insurance advisers are the reverse - they have many, many, interactions with people, and tend to have fewer administrative tasks for each one. So when each of us looks at digital we see it automating the high-volume interactions that are most troublesome to the process.

Obviously the actual development of digital advice will be far more complex and organic than these models imply, but I'm not going to bet that digital can't help you acquire clients. I guess I'm betting the other way. Look at all the marketing automation tools we employ already.

Dan Schreiber on Digital Insurance Companies

Daniel Schreiber has a great piece over at LinkedIn on how AI "eats" insurance. You may take only a very little comfort that he's from a general insurer. Life insurance is not immune to the lesson he's preaching. The only comfort New Zealand insurers have is that courtesy of the tiny size of our market, local regulatory variation, and our distance from the centres of innovation (mainly San Fancisco and London) we have more time to react and build proper digital platforms ourselves, before these folks arrive. But maybe you won't, maybe you'll just let them. For digital insurers going direct, like Daniel Schreiber envisages, it is vital that end-to-end you own your platform in order to bring in all the data to the learning environment. As an aside, Schreiber offers the briefest and most cutting take-down of averages: "on average your customers have one testicle". Anyhow, go read the whole article. It isn't all right, it isn't all as simple as that - but there are some strong points, and they should spur action.

Would You Take Money Advice From a Computer?

As robo-advice is set to take off in NZ this year Tamsyn Parker has written this article for NZ Herald outlining potential risks. Robo-advice is believed to give lower-income Kiwis access to financial advice they may not usually have access to through a 'human' financial adviser. Once again the discussion is centered on the investment side of robo-advice. Realistically, they might be right: the demand forging factors are strongest for KiwiSaver. The regulator wants KiwiSaver providers to offer more engagement tools for customers, and to demonstrate that customer have at least considered a more aggressive investment strategy. For providers there are cost pressures caused by serving many members with small balances through current (human-provided service models) Click here to read more. With insurance the pressures are different - while there is no current regulatory pressure, and a wide variety of services models already exist, although cost pressures for using human advisers are, if anything stronger.