Turo blog

Four myths of digital financial advice

January 18, 2021

Just like in the early days of the online shopping, people were reluctant to share credit card details for fear of them being stolen from the 'black box' of the internet.

The same goes now for digital advice, some tend to think about automated financial advice as an unpredictable and complicated beast that can't be trusted to give life-changing advice to clients. Well, it is complex, but it is in no way unpredictable.

Here are the top four myths about automated financial advice:

Myth 1: Digital advice isn't reliable

Wealth Wizards, for a start has been automating financial advice for over 10 years. We understand that an adviser might want to check any fully-automated advice before it goes out. If that puts their minds at rest then so be it. During the implementation stage of any automated advice module, we test, test, test until we're confident that the advice given fits the 'house view' of the adviser.

When in a live environment the testing continues on a daily basis. Like all digital applications, all decisions made by an advice engine are based on logic and rules. We recently achieved a 94% rate of automated recommendation in our Decumulation module meaning that out of 100 cases put through the Turo advice system, 94 were able to get an automatically-generated advice solution.

If advice is provided digitally, there is a robust digital 'paper trail' which can explain the reasons behind every piece of financial advice. Digital advice doesn't have a bad day and isn't exposed to the human judgement errors.

For those firms not ready to take the plunge with fully-automated advice, digital advice can still play a part. Our financial advice engine, Turo can also be used in a regtech sense, to check the advice output of a 'human' adviser. The advantage of automated advice regtech is that it can check for outliers very quickly, thus reducing an adviser's risk and ensuring the best outcome for the client.

Myth 2: A digital customer journey doesn't justify the standard fees

When you automate and become more efficient in your processes, your business model will naturally evolve. For example instead of servicing 50 clients throughout the year, you can service another 25 with straightforward requirements using a digital solution.

You must not underestimate the value that you're creating for your client which is built on years of expertise and of course your firm's unique advice policy. Whether this is delivered digitally or solely by an adviser, your client will still get the same, thorough recommendation.  

You can also create perceived value for your service in many other ways beyond digital advice such as giving access to extra digital products, sending clients useful articles and content and invitations to events and webinars.

Digital access can also be your engagement start point, clients and advisers hate duplicating data having to enter the same answers multiple times. Your clients can also start their journey digitally and receive help and guidance, then at the point they need advice they have a choice of digital advice or to revert to a financial adviser, this is often called a ‘hybrid’ model.

A huge part of the financial advice process is the fact find which can take up to two hours in a typical face to face model. By embracing digital advice, you can send parts or all of the fact find to the client prior to the meeting. This enables more quality time to be spent with clients so they can talk about their needs and wants more, rather than boring hard facts.

Myth 3: Digital advice will replace the need for trained financial advisers

Advice technology is not out there to take jobs. The advice gap is real, there is a huge shortfall in the amount of qualified advisers and the millions of people needing financial advice. Financial advisers will usually turn down clients under a certain asset threshold, but digital advice can be the answer to open up advice to the millions of underserved clients. Digital advice helps to automate key parts of the advice process, freeing up the adviser to concentrate on the more complex needs of other clients.

We like the term 'piloted advice', take the aviation industry, the technology is so sophisticated that a plane can practically fly itself, yet because the lives of so many people are at stake, it needs to be overseen by a qualified individual.

The same is true for financial advice, many aspects of the process can be done digitally and simple cases can be done completely digitally but complex cases will always be overseen by an adviser.

Myth 4: Clients won't trust digital financial advice

Every financial adviser has a spectrum of clients each with their own needs. Those below the age of 40 might be more comfortable about getting advice online without needing to interact with a single person. Others might need more help and prefer a chat with an adviser over a coffee. Advice technology isn't a 'one size fits all', but will enable advisers to be more flexible and accommodating with their offering.

One of our clients has been using a hybrid approach to fill in the decumulation fact find, instead of going through the risk profile in a video call, the adviser can send the client parts of the questionnaire to complete beforehand. This gets auto-populated on the Turo platform ahead of the call.

What's clear is that digital advice can help to free up an adviser's time so that they can concentrate on the many other responsibilities that come with an adviser's role, with the assurance that the reliable digital advice recommendations have been taken care of.

This trust will build over time as the consistency and compliance of advice technology is proven, more advice firms embrace digital financial advice, and it begins to play a part in every adviser's business model.

Written by
Nick Hall

Nick is a Business Development Director at Wealth Wizards, he has many years of experience designing and implementing new propositions.

With over 25 years in senior advisory and business development roles in financial planning, Nick’s experience spans five major bank and building society advice models.

Find out more about Turo and how it can automate key parts of the advice process for your clients and advisers.

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