A technology expert is doubtful that financial advisers could be replaced by machines in the next two decades, as predicted by an Oxford University study.
Michael Kinens, a Senior Business Development Executive at IRESS which supplies share market and wealth management systems internationally, said there will probably always be the need for real-life human advisers.
“Two decades is a long time and a lot can happen in that timeframe, but whilst technology is being utilised in so many ways, there’s always a need for the human element,” he said.
Instead, Kinens sees a huge growth in the relationship advisers will have with technology, and the way in which they will harness it to provide more efficient and cost-effective solutions.
One increasingly popular trend in financial services that shows no sign of slowing anytime soon is the use of the mobile space, and in particular, applications or “apps”.
These are software applications designed to run on mobile devices such as smartphones and tablets. Apps work when the mobile device does not have access to the internet and this means their libraries of content are available anywhere, anytime.
There’s room for a huge amount of app growth, Kinens said.
“I think what we’ve seen from the general market has been that tablets have been used predominantly as a data collection tool and they’ve been singular focused as to their capability,” he said. “What seems to be fuelling ideas is that it shouldn’t just be a traditional application that does one thing – advisers need a tool that has multiple uses.”
Such tools are a focus for IRESS, and their aim is to provide greater unification between the front and back office. The real value is in having a tight link up from what happens at the beginning all the way to the back office, Kinens said.
Solutions such as these are incredibly cost effective because they cut out any unnecessary “waste” in the process.
And advisers are putting in more and more requests for the client-focused applications to be improved, he said, giving the example of an app which allows the client to execute the adviser’s instructions electronically.
But insofar as there are advances, the different regulatory and legislative changes under FoFA have had a slow-down effect on the technological developments in financial services, said Kinens.
“The reality of it is that everyone got distracted heavily by what FoFA introduced, and most businesses would say it hurt them financially because they had to do something they weren’t doing before,” he said.
“The whole exercise, legislation, and the way it got beat up in the media resulted in people spending a lot of time thinking about it.”
Now that the FoFA reforms have been frozen, advisers want to get on with looking at how their businesses run and how to get more efficient. The industry also needs to acknowledge that there are huge inefficiencies that advisers pay for, the cost of which gets then passed on to the client, said Kinens.
“There will certainly be greater focus and pressure from advisers wanting change in that space.”
However, the good news is that change is coming in the form of a new breed of advisers – and no, they’re not robots.
Younger advisers with an already naturally technology savvy skillset have been moving more and more into positions of influence within advisories.
“It falls down to timing. They’ve been in practice for a number of years and they’re now getting themselves into positions where they are in a decision making team,” said Kinens. “We’re speaking to more advisers that are younger. The average age used to be 50-55, and I don’t know what the current numbers are but certainly I’m starting to notice that age coming back.”
Ultimately, technology is only part of the solution to solid and efficient advice, and for “some time yet” there will always be a need for adviser: albeit with a lot more technological pizazz.
So it seems – at least for now – robot-run advisories are off the cards.
“In any case, we’ll be around for another two decades – touch wood – to see if this all comes into fruition,” Kinens laughed.