“Two small words: Digital advice. Or, Robo advice. Automated advice. Online advice. Streamlined advice. Or how about hybrid advice or cyborg advice? Or Digital wealth. Whatever the terminology, it’s on the agenda in every boardroom of every business I speak to. To maximise the opportunities – or defend against an emerging and very real threat.
And regardless of the terminology you use, one thing is certain: from the simple fintech propositions to the big high street brands re-entering the advice market; wealth managers getting in on the action; even to the global tech giants eyeing up the opportunity – Digital Advice – in its many and various guises – is here to stay. This is a far cry from the early days, just a few short years ago, when the term ‘robo-advice’ was used to disparage the early disruptors such as Wealthfront and Betterment in the US, and Nutmeg in the UK. There is no doubt – digital advice has gone global. Altus – the company I work for – is currently tracking over 100 propositions, services, and suppliers along the digital wealth value chain… just in the UK! A few personal thoughts – based on Altus consumer research, a multitude of client engagements, hundreds of meetings and site visits, various RfI and due diligence exercises, judging industry awards, and sharing thoughts and ideas with digital and wealthtech experts all round the world:
“Digital Advice – in its many and various guises – is here to stay”
– First up – the elephant in the room: the commercial model. For many – it simply…doesn’t…work. And that’s because the right business model isn’t in place. And it’s why we’re now seeing:
“The elephant in the room: the commercial model. For many, it simply…doesn’t…work”
- many D2C propositions now looking for B2B2C partners, or, to extend their propositions into the pensions and at-retirement space; or, for significant investment / to be acquired.
- The initial focus on the Millennials segment has now broadened into other customer and wealth segments
- A number of organisations are now looking to Workplace and affinity groups.
- Wealth Managers and advisory firms want to extend their services to a new segment of customers – but personally I think many have misunderstood how to do this – simply ‘slapping a logo on a robo’ is not a winning formula.
“Slapping a logo on a robo’ is not a winning formula”
- Asset managers wish to develop a new direct route to market, and protect the back book – but have they got the consumer brand to do this?
- Life companies need to (and are now trying to) up their game to remain relevant. Or face the consequences.
- And of course some ‘robos’ are looking to new markets – mortgages, protection, equity release… even DB transfers…
‘Build it and they will come’ is a complete fallacy! No they won’t!
“‘Build it and they will come’ is a complete fallacy”
- It doesn’t matter how beautiful and engaging your site is if hardly anyone ever sees it! Is social media part of the long-term answer?
“Just being an incumbent doesn’t guarantee success”
- Just being an incumbent doesn’t guarantee success – let’s face it, there have been one or two high profile failures.
- But – being an incumbent absolutely should give you an advantage.
- Yes, I accept there is a segment of investors who are self-directed – but you can’t all go after them and succeed!
- So, those consumers who are left – the vast majority – they might call it advice, they might call it something else – support, help, even guidance, perhaps – but advice – with a small ‘a’ or capital ‘A’ – is where it’s at.
- An increasing number of businesses I talk to recognise this. Those that don’t – or that don’t offer a differentiated proposition – yet still charge as much (or in some cases more) than those that do offer advice – time is running out… it’s time to think again…
“Many digital advice services in the market today are DULL. Really dull. And not intuitive, full of jargon…”Customer experience, of course, is critical. We all know that. And yet – having personally used many digital propositions in the market, both in a personal capacity and also for work research and work assignments, I’m sorry to say that many are DULL. Really dull. And not intuitive. Full of jargon and things that most people just don’t understand. And ‘me too’.
- Where’s the imagination? The desire to differentiate, to delight? And we wonder why the numbers in the business case that have been so carefully crafted haven’t been met!
“Don’t fall for ‘faster horses’ syndrome”
- Don’t fall for ‘faster horses’ syndrome. Customer research is good; is helpful. But it’s important you think beyond what your target customers can envisage. It’s time to re-imagine. Or get left behind.
“Data – and how you analyse it, understand it, and use it – will separate the winners from the losers”Data – and how you analyse it, understand it, and use it – will separate the winners from the losers.
- The banks have always had the advantage here. Not that they necessarily used this wonderful gift, but they had it. Not any more.
- PSD2 / Open Banking / data aggregation and analysis provide amazing insights and therefore opportunities, and should be high on your agenda.
- The next few years will see a number of new entrants into the FS sector because they understand data, they understand your clients, your customers, better than you do.
- Take a look at Ant FS or Tencent in China. Or even the likes of Starling Bank in the UK. The platform marketplace will become a viable alternative to the traditional vertically integrated model. And I have no doubt at all that the banks in the UK – amongst others – could (or should) create a very neat hybrid of the two.
And the big one – the real disruptor.
“The real disruptor: Artificial Intelligence (or more precisely, machine learning)”
- Artificial Intelligence – or more precisely, machine learning – will automate many – in fact most – of the jobs we do today. It will certainly dominate the digital advice space.
- It’s already beginning to make its mark in the US, while China is leading the way in the union of AI and fintech. And in the UK, expect to see the rise of the augmented adviser.
- And don’t forget to think about the skills and knowledge you’ll personally need to become unique, to become ‘unclonable’.
- We’re at that pivotal point where some propositions will gain traction and others will fail and quietly disappear.
“Be bold. Be different. Be on the consumers’ side. Let that be your legacy.”A challenge for you:
- Don’t get caught up in an ‘echo chamber’ where we all believe, repeat and share the same story and thinking.
- Instead, take all the learnings, all the insights, and create something truly memorable.
- Be bold. Be different. Be on the consumers’ side.
- Let that be your legacy.”
Simon Bussy is Domain Director – Wealth at Altus Consulting. I’d love to continue the discussion and debate; please contact me on email@example.com And please follow me on Twitter @SimonBussyAltus where I share global best practice, insights and challenge.