“Uberization anxiety syndrome” is the concern that, as consumers get used to having their needs met digitally as soon as they realize they have a need, financial professionals’ traditionally relationship-based business will suffer.
Simeon Hernandez, head of retirement business development of Global Atlantic and head of the firm’s innovation lab, referred to a paper from Hewlett Packard that identified four things traditional businesses need to do to address digital disruption in their industries: educate yourself, foster innovation, reimagine the status quo and establish a resilient platform.
For the financial services industry, that means advisors have to stay on top of technology, “especially as we look at who we’re trying to do business with to see if they’re looking at things in a different way than we are,” Hernandez said at the IRI Vision annual conference on Tuesday.
Uber provided “empowerment” for the user, Hernandez said. Trying to hail a taxi sometimes meant being rejected, he said. Uber showed people “that they don’t have to take that.”
“If you think about what we’re facing in our industry with this potential ‘Uberization,’ clients need to be educated about those options that are out there,” Hernandez said. “They may not know the new tools of financial planning, which is why the Betterments of the world are getting that message out and grabbing [clients’] attention.”
“I don’t consider myself a technologist, but you have to jump in the deep end,” Bill Benjamin, CEO of US Bancorp Investments, said. As alternative channels for advice emerge and clients age into the decumulation phase of their financial lives, he asked, “how does this work in a way that we can take care of clients in all stages of their life” and at all levels of wealth?
“Mass market clients need help and they deserve good advice,” Benjamin said. Unfortunately, as consumers have gotten used to being served online, “Who wants face-to-face now?” he said.
Benjamin noted that he’s leaving US Bancorp at the end of the week and aims to join the fintech industry.
In addition to having a close relationship with clients and their families, Benjamin said the “ideal advisor” should have a thorough understanding of tax laws, insurance planning, risk management, capital markets on a global, portfolio theory, all of the products available to a client and whether they would be appropriate, Social Security and Medicare.
“If you go through the list and you really thought about ‘What would I want in my ideal financial advisor?’ there’s probably no advisor who can do all of that,” he said.
Technology can help advisors do more for their clients. “I’m not a huge believer that we take the advisor out of the equation,” he said, but that advisors use technology to complement their work.
Christine Lange, senior vice president of digital retirement solutions at Voya Financial, said technology has changed the way people get and process information. For example, clients don’t want to read a white paper to learn the importance of saving. They learn more through gamification and seeing actual outcomes when they change aspects of their plan.
“Our ability to multitask has increased, so we don’t want to read big white papers and figure out the power of saving early. We need to show people through play and technology and gamification how these things matter,” she said.
That ability to multitask comes with drawbacks, though, as clients are overloaded with information online. Lange referred to research by Shlomo Benartzi that found users have visual biases that affect the actions they take online.
The financial services industry has to think about “digital mechanics, digital ways to combat those biases that people have.”
Artificial intelligence is an umbrella term that includes things like machine learning, text mining and propensity analysis, John Hyde, president of CapitalRock, said.
“When you talk about artificial intelligence, you want to understand what problem you’re trying to solve,” he said.
The industry can use artificial intelligence to help manage the DOL’s best interest rule by implementing tools with repeatable and predictable outcomes, compliance rules built into the processes, and audit trails, according to Hyde.
— Read Fintech Is Exploding, but How Firms Use New Integrations Is Key on ThinkAdvisor.