The role of technology across industries has perhaps never been more pronounced than during the past couple of years. In the world of financial advice, however, where does an adviser draw the line between the human and the digital? Apex Advice Group Limited chief executive Craig Mulholland believes there are key things to consider, especially for smaller businesses.
At this year’s conference organised by the Financial Services Council of New Zealand, among the topics discussed was how to find the balance between face-to-face advice and the so-called ‘robo-advice’. In Mulholland’s view, financial advice providers should be looking at customers’ needs, first and foremost.
“Every consumer is different,” he told attendees during one of the breakout sessions. “So, the key thing when we look right across the client base is that everyone has a different need and what is ‘robo’ to them. Some, even just going on to a basic app, they’ll think that’s robo, versus something really, really complicated with good AI (artificial intelligence) sitting behind it.
“Therefore, as a provider of service, you go, ‘Well, where should we be investing? Should we be investing more in our people to get in front of clients, or should we be investing more in some of these more complicated algorithms?’ You’ve really got to go back and assess, ‘What is our client base and what do they need?’”
For the CEO, in a market that has not fully embraced what advisers offer, it’s about those small steps and whether they’re worth taking.
He noted: “If you go back to 2019 and you think about the more complex products like insurance, most people would expect an adviser to come to them, or them to come to the adviser’s office, and have that conversation. With COVID, that didn’t happen. And so we looked right across a spectrum of young people, millennials – most of them now are really comfortable with using Zoom or Teams or even just the telephone.
“So, if we ask what is robo and what do our clients like, I think it’s early steps. The status is only about 20% of the nation takes advice. So, I think it’s about small steps, and I think it’s about investing where you need to and providing the form of technology that your clients are capable with. And it depends on the size of your business as well.”
Mulholland continued: “Can you afford to build out a portal? Does it really matter? Can you use other people’s portals? I don’t think there’s any one answer other than to step back and say, ‘What do our clients need and what’s the best way?’”
The chief executive – whose camp provides full-service financial advisory spanning mortgage, investments, and insurance – went on to highlight the stages at which a particular approach might be better suited.
“I think when you get early adopters, when you get younger people, yes, they’re going to love using apps and a smart way to do things,” he said. “As you need to get more complex, they’re going to need to talk to an adviser, and you’ve got to work out what’s the most appropriate method for that, whether it is the face-to-face or Zoom.
“But I think COVID has really been a game-changer around people’s willingness to even have online services. As a nation, we’re very slow to adopt financial advice.”
Meanwhile Mulholland lamented that he has yet to see the digital solution that most advisers would want to get their hands on.
He stated: “Pre-COVID, when you had advisers driving to clients to provide advice, that was really inefficient… If you look at it without a digital solution, then you’re saying our industry is, at some point in time, going to become uneconomical for it to continue to provide advice on a face-to-face basis. But then you flip over and go, ‘What is the cost of technology and how big is my business?’
“So, you think that the larger the scale, the easier it is to adopt digital solutions... but for a lot of businesses, the cost of digitising is really, really significant. My personal view is that there is not a white-label solution out there that most of us advisers who are in transitional phase can actually go and say, ‘I’ll buy that as it’ll help me engage with the client’, etc.”
During the event, the Apex Advice boss declared that the sector has some figuring out to do.
“For the big end of town, they’re at legacy systems – it’s going to be tough, but they’ve got the budgets to change,” Mulholland pointed out. “For the small end of town with individual advisers and small groups who really want and need to use digital capability, there’s no single solution out there that I’ve seen in the market.
“So, I think there’s some huge challenges in the industry around just the pure economics of how do you make it work. We’re hoping that being in the middle is about right, because you’ve got the scale to invest in technology, but you’ve also got the ability to still do face-to-face when you need it... As an industry, we need to figure out if there is a way in which we can keep as many advisers in the market as possible providing services in the way that our consumers want.”
