by Susan Edmunds
The international Financial Standards Planning Board (FPSB) has released a new report on fintech and how it will affect the future of financial planning.
CFP in New Zealand is administered by the Institute of Financial Advisers.
Its chief executive, Fred Dodds, said advisers the world over seemed to feel similarly about the prospect of fintech developments such as roboadvice. “The feeling is, it’s here, it’s coming. I think we’re going to find advisers are going to use it more than be scared by it and are looking for opportunities.”
IFA president Michael Dowling pointed to an NZIER report that said New Zealanders tended to be early adopters of technology – but a good regulatory framework needed to be developed. It said 46% of the New Zealand workforce had a high risk of computerisation but professionals were the least likely to be affected.
The FPSB report said roboadvice models that offered direct-to-consumer advice were already struggling with low margins, the report said. It seemed likely many providers would change their systems to offer adviser support, which would allow the sector to invest in technology and clearly define the value of a human adviser.
Compared to a year earlier, CFP advisers were less worried about the disruptive potential of roboadvice and were more interested in how it could complement their businesses.
They saw potential for it to help with data collection, speeding up client on-boarding, data aggregation, checking calculations, asset allocation, delivery of documents, updates on market changes and portfolio construction.
It could give them better efficiency and accuracy, they said. Automation could also help ensure regulatory requirements were met. Some said roboadvice could give “good enough” advice to get young people and those without much money to invest into the market, who would not normally talk to an adviser – and that was better than bad advice, no advice, or having those people not participating in the financial markets.
But respondents said the “listening, feeling, exploring and interpreting of qualitative information that is central to the financial planning process cannot be replaced by automated advice tools”.
“The best planners will be the ones who can let computers do what computers are best at, and humans do what humans are best at.” In the process, automated advice tools are requiring human advisers to become “more human” – the human relationship becomes the value proposition – which is seen as a good thing for the financial planning profession.”
FPSB said advisers could better position themselves to deal with fintech if they identified trigger points at which automated advice users would seek out a professional financial planner, and develop strategies to attract those clients.
Dodds said roboadvice would probably not be sought-after by the lump sum investors that traditionally made up the bulk of most advisers’ client bases.
“They have decent chunks of money and have different questions other than what’s the best asset allocation. Adviser aren’t scared, they know it’s coming, they’re more inclined to say how can we use this in practice. Let’s not head into Christmas thinking Father Christmas has an enemy in his sack – it could be a present in there that could assist everyone, advisers included.”
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