Can robo-advisory become the dominant design in financial advice?

In 2010 many new robo-advice tools started emerging in the financial services industry worldwide. This article outlines some of the pioneers, growing pains and emerging leaders, while this article explains how Kiwis are becoming more accepting of 'digital humans' and some of the services they offer.

This is a really important quote from the first piece, highlighting a nuance in digital-human hybrid service provision: 

"...moving to ‘hybrid’ models,digital-first services that offer human advice when required. This, for us, is the key. It gives these firms the ability to serve their customers at a level they want and at a price point they are happy with. At times this price point will include a human interaction, others will simply demand a transactional-focused digital-only product."

Instead of asking 'can robo advisory become dominant?' perhaps we should be asking 'can primarily non digital services survive?' the question then becomes the extent to which digital services are present in your offer. If you are waiting for someone else to develop digital services for you, then you are going to be placed in the situation of merely accepting the role (and margin) that they envisage for you in the value chain. 


Partners Life: Underwriting Management System

Partners Life's new underwriting platform was launched earlier this week. Originally announced as being called PLUME the name has been finalised as MUM (My Underwriting Manager). Today I attended a presentation on the new system and here are some of the key points:

  • It has reduced questions by about 50% from the original paper app form
  • MUM adjusts the questions based on the benefits quoted, so there are no income and work-related questions for someone applying only for Life Cover for example.
  • You can also apply for business covers through MUM, at this stage Business Life, Trauma and TPD can be automatically underwritten but some other business products such as Key Person cover and Loss of Revenue will still be referred to an Underwriter
  • After an online app has been done you can go back to the quote and change sum insured etc if the client changes their mind and MUM will automatically adjust itself accordingly
  • The confirmation of terms of a policy will be instantaneous in most cases
  • Payment methods can be added to avoid delay in issuing the policy and are verified in real-time
  • You have 90 days to complete an app, you can start and go back and continue it at anytime within the 90 days
  • MUM can be used to apply for alterations to existing policies but will it still need to be approved by an Underwriter
  • Customers can sign online to allow the insurer to gain access to medical records through Konnect
  • A customer signature is only required if requesting information from a Doctor, otherwise Partners Life just require the client to tick a box as a declaration

What happened to the FMA website?

The FMA website was down yesterday, and this morning. What happened? The New Zealand Herald has this story to update you - link

It is a reminder that we can all be affected by cyber issues, and privacy breaches are easy to make, and hard to recover from. This reminds me to make a post on Cyber Week and to feature more around management and insurance for these events. 

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. 

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.

The evolution of trust

If trust is the new currency, and my only quibble with that statement is the word 'new', then exploring what trust is, how it works, and why it is so valuable is something worth doing. People do work on this stuff, some of them model it so you can get to grips with the basics experimentally.

Below is a link to an interactive site which allows you to explore what cheating does to a situations in which trust is required - and how variations in behaviour, even the role of simple mistakes, can have an effect on the behaviour present in the whole system. It does take time, about half an hour. I enjoyed working through the site with Matthew, my youngest child, who is twelve, who found it and brought it to my attention. Making predictions and testing them was fun and fast-paced. It helped us to have a conversation about trust, and how we respond when people let us down - and how others perceive us when we let them down. It shows the value of forgiveness in economic systems to allow trust to recover - and demonstrates that is a profitable approach. All in all, it was a valuable contribution to thinking about some of the challenges we have in developing market structures that support good conduct.

Click here to play an interactive game of trust by Nick Case.

Quotemonster upgrade beta now live

Quotemonster has gone through a major upgrade. You can try out the new site, and all your quotes and research on either site are accessible on both. The new layout may take a little getting used to - but it allows these cool new features:

  • Much better display on mobile devices - using an iPad, tablet or even a phone you will be able to quote and compare on the run
  • Needs analysis shows Mortgage Cover - showing Income Protection and Mortgage protection as split benefits
  • New settings section for Advicemonster users so you can set your own defaults for cover calculations
  • Enhanced Head to Head analysis with the addition of policy wording linked to items  
  • Quicker saving functions
  • New options for default and "this quote" occupation settings

But don’t panic. We will be running both platforms together so you can choose to continue to use the old platform in the meantime. To see the new version simply click on  icon 'New Site' in the orange bar at the top and it will open in the new tab (as shown in picture below).

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Please do try the new version and let us know what you think. We have made it easy to switch between them as client details will appear on both platforms when saved.