In a brilliant article , which you may be quick enough to access via this link, the FT’s Damian Fantano explores what is going on with robo-advice – or what robo-advisers like to call “putting the AI into financial advice”.
My take, and the thrust of this article, is that we can already see in the new ways of doing things, a way to navigate what seems complicated – so that it becomes simple.
What “artificial intelligence” is supposed to do is to lead you from screen to screen with the deftest of nudges to a leading question, that question leads to you making a financial decision.
There is nothing new about the “user journey”. TS Eliot explores one at the beginning of the Lovesong of J Alred Prufrock
Let us go, through certain half-deserted streets,….Streets that follow like a tedious argumentOf insidious intentTo lead you to an overwhelming question …
Oh, do not ask, “What is it?”Let us go and make our visit.
People know what’s going on…
In its call for input on RDR and FAMR in May last year, the FCA sounded confident
There was a statistically significant increase in the number of people taking regulated financial advice since 2017, with an additional 1.3m people taking advice. There was also a significant increase in the use of guidance services, and automated-advice services, to help with financial planning decisions.
In the detail of their findings it’s clear people are confident too
Of people who have not taken regulated financial advice in the last 12 months, but whose circumstances suggest there may be a need for advice (defined as people who have at least £10,000 in savings and/or investments):
– the most frequent reason (50% of responses) was that they did not feel they had a need to use an adviser during this time
– a further 37% said they felt able to decide what to do with their own money (significantly higher than the 28% who said the same in 2017)
– less than 1% said they had not been able to find an adviser,
2% they did not know how to find an adviser
and 5% said they had doubts about whether they could find an adviser suitable for them
Is lack of advice really the problem?
On the face of it – there doesn’t sound like a huge unsatisfied market here. People are making their way through the streets and taking on the “overwhelming questions” with their own resources.
The answer to that question is that it depends where you look. If you read the FT you are looking in the right place, you generally have more than £10,000 in “savings and investments” and the people who consult the AI – advisers featured in the article are financial journalists who are very aware of what is going on.
This is Damian Fanato’s personal experience
AI Advisers or Robo lead-generators?
Buried in that user journey are a number of “monetisable” opportunities for the advisers to make money via referrals, on top of the £2 per month licence fee to get more of the same.
The inference is that robo-advice was little more than a shop-window for Alexander Hall. No doubt, proprietary solutions are also available where there is “wealth” on offer, as the robo- adviser – Eva – is a “wealth-wizard”.
There is a difficulty here and it’s about the audience. The FT is talking to its own and as such it is allowing us to smugly dismiss Eva as a financial tour guide. Damian suspects that Eva wasn’t ever going to arrange a mortgage herself and that when it comes to the “overwhelming question” , we are not in the world of driverless – underwriting.
This is not always the case, artificial intelligence is being employed in insurance and much of the rate-setting on the price comparison sites recognises good and bad risk with reference to big-data and even the applicant’s behaviour. Sinister as it sounds, getting cheap life-cover like maximising your annuity, is all about knowing the right answers.
It’s time to stop this dissing
We lead busy lives and the advantage of a trusted robot, may at present by little more than Siri, Alexa or Eva’s capacity to navigate us to the right articles or (in Eva’s case) adviser.
Robo-advice may excite in the 50% of FCA responders, a recognition that it might be worth paying a little more attention to their financial planning and maybe take Eva’s advice and trot off to a mortgage broker.
But I suspect that it is considerably more helpful for the 37% of people who said they knew what they were doing, to get a second opinion. For the small remnant who couldn’t find an adviser, some might find Eva invaluable.
And not all of us are FT readers. The knowing tone of the case study suggests that Keith Richards of the Personal Finance Society is preaching to the converted (here he is quoted in the article)
“Given the communication skills and empathy needed to fulfil the entire role of a professional financial adviser, it is unlikely that AI will be able to replicate this any time soon, understanding [a client’s] goals for themselves and their wider family; how their finances fit in with their career; educating them about their investments and helping them understand how they are going to manage different risks.”
For the richer more sophisticated FT reader, this is undoubtedly right, but this empathic advisory service is something that Eva could develop, given a chance to get to know her users.
I suspect that the lifetime advantage of having Eva , in your phone , could become every bit as valuable as the empathic adviser, because Eva has certain key advantages.
Eva does not take holidays and so long as you have battery , she is on hand to help. She is cheap at £2pm and the more you ask her, the better she gets to know you. If Eva really is an AI tool, she will not just become trusted, but more trustworthy, as you get to know her.
Having read through the article, I’m getting to the point where I would like to have Eva in my pocket, and if I’m proved wrong after a couple of months, she has cost me what I pay for most of my interesting conversations – a cup of coffee.
So I’m not dissing Eva, or robo advice – I am asking the question – “how do I meet Eva?”
How do I meet Eva?
It would appear my best chance of meeting Eva for free is by joining a firm like Unilever, who make her available to their staff – presumably as an employee benefit. I may be able to find Eva by myself (I do know some of the good people at Wealth Wizards) and I’ve even got a link to visit myEva
If J Alfred Prufrock was alive today, I am sure he is the inquisitive cove who’d be asking overwhelming questions with artificial intelligence. I felt like this – which is why I started AgeWage.
I am quite sure that vast numbers of people today navigating the treacherous waters at retirement will look for whatever online friend they can.
There is an urgent need for Eva, or those like it. Our customers are impatient and like Prufrock, they want to get on with it.
Oh, do not ask, “What is it?”Let us go and make our visit.