Intermediaries should gain the upper hand


Considering the regulatory wave, will intermediaries find it easy to thrive in the uncertainty of technology and Artificial intelligence (AI) and adapt to a new way of doing business? It is after all, a world of complete opposites - man versus machine.


FAnews spoke to a few industry professionals about their views on this and whether they believe artificial intelligence will be the death of the intermediary or the complete opposite. 


Let’s face the music


“AI will not be the downfall of intermediaries. The human touch will still be necessary in the customer relationship. In the future, machines/technology will no doubt grow in sophistication and perform ever more complex tasks to assist humans, rather than replace them entirely. In the financial sector, machines and their algorithms are well suited for the simpler product types and indeed may well threaten some jobs in other sector spaces such as asset management. We must not forget though, that humans will still need to understand and interpret the data held by the machines and furthermore remove irrelevant data from their memory, which in turn allows for increased learning. I think we humans must let machines do what they do best and vice versa,” said Richard Rattue, Managing Director, Compli-Serve SA.


“Human relationships and trust cannot be replaced by machines, but advisers need to streamline their processes and create efficiencies. Instead of being threatened by the robots taking over, skilled professionals should ask how they can integrate technological innovation into their businesses, supporting their process and creating an improved client experience,” said Jason Bernic CFP®, Financial Planning Coach, Old Mutual Wealth.


“As this type of “advice” gains in popularity our challenge will be to make it work for us rather than against us. Remember – your value proposition cannot be automated and neither can your ability to develop face-to-face relationships. Financial advisers certainly have the edge at this stage, because we can rely on our human touch to understand our clients’ dreams and aspirations. We have the empathy necessary to interact with our clients at crucial financial decision points throughout their life stages,” said Kobus Kleyn, a CFP and Director at Kainos Financial Services.


“I do believe that financial intermediaries have the upper hand, mainly because there are no major restrictions in the manner we operate at with our clients. In fact, I believe AI technology will not be downfall of intermediaries but will play a key role to allow for long term sustainability of our practices, for those who embrace AI into our practices, in some form or other,” said Kleyn.


The digital age is not going away


“Like the Retail Distribution Review (RDR), technology and the digital age are not going away. Go with the flow because if you resist innovation you will be left behind. Even if you have older clients, they are not looking for old thinking or old ways of advising. Your clients want advice to be packaged in an experience that includes both human interaction and digital solution. Add to that, if you can simplify the process and save your client’s time, then you will be far better positioned to differentiate yourself from the competition, including the robots,” advised Bernic.


“With RDR taking effect in 2017 with a slow phase-in process, there is no doubt that the short-term impact will be both an advice gap and adviser gap. With the current advice gap, robo-advisers can have an impact to help to close the current advice gap, but also reduce the RDR impact somewhat post-RDR South Africa. The problem however is that there is just not enough awareness around robo-advisers in South Africa, and therefore the take on simply is not acceptable to build the eco-system. The Financial Services Board (FSB) has a lot of work to do on regulations around robo-advisers, which could help the process going forward,” continued Kleyn.


“Financial Services Providers (FSPs) should be looking at ways to keep up with the changing times, particularly to stay in consideration and current for Millennial investors. Much like other technical disruptors have proved and as technology tends to improve on itself, robo-advice is expected to become the standard for digitally savvy investors. It could also play into narrowing the advice gap that pending regulation such as the RDR may present – whereby younger or ‘wealth-poor’ investors (those with little money to invest, but still appetite to save) could be advised. Whether this will qualify as sufficient or appropriate will remain to be seen, but there are plenty of factors that FSPs will need to consider to be compliant as they brave the wave of embracing change,” said Rattue.


Ignore it at your peril


“Technology disruption in financial services is unlikely to completely replace conventional financial advice since our lives are just too human for a machine to compute the emotion behind our insurance and investment needs. Some clients will undoubtedly enjoy dealing with a technology-only solution, but international research over the last decade suggests that by far the majority of clients still prefer to deal with a human adviser on important matters regarding their financial future,” said Lance Solms, Head of Itransact.


“Another factor that will keep human financial advisers relevant is the fact that most of us find it very difficult to make long term financial decisions in an uncertain environment without consulting another human being. Advisers should think carefully about what type of Fin-Tech they choose for their business, it must make commercial sense for them and their clients,” concluded Solms.


Rattue continued to say, “Intermediaries need to realise that AI technology is a useful tool and here to stay – ignore it at your peril. It is true that AI largely resides in the corporate world at present, but I foresee a “trickle-down” effect over the next few years where greater AI application will become available at a reasonable cost for the smaller business. I think intermediaries must try and stay abreast of developments, if not directly then engage with partners who are involved in this space. Embracing technology will keep you on the right trendline. Times, they are changing.”


A hybrid business model


“Financial advisers have to embrace robo-advice and other AI into their practice-building to ensure long term sustainability and profitability. There is by far more advantages then disadvantages when it comes to AI, and they include reductions with daily administration duties, a reduction in compliance needs, filling an advice gap where younger generation want more single advice instead of holistic financial planning advice. It will also help to reduce overhead costs and increase operational efficiencies,” said Kleyn.


“It therefore should all be about your unique value proposition currently and certainly even more so post-RDR. Incorporating AI into your practice building should not only enhance your value proposition but should give you a competitive advantage. The future is a hybrid business model, where automated financial online advice can complement the traditional advisory models, and combined, it can scale your investment business with low cost, grow passive income, and therefore allow us to thrive in uncertainty, when we take charge of our destiny by joining competing forces instead of fighting the future. It is up to us to not be disrupted, but become the disruptors,” Kleyn concluded.


Editor’s Thoughts:

As Bernic said, human relationships and trust cannot be replaced by machines. So instead of working against it, technology should be embraced and integrated into businesses. Do you agree? Please comment below, interact with us on Twitter at @fanews_onlineor email me your thoughts


Articles published courtesey of FANews

Original articles can be found at



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