If it’s true that where the US goes so goes Australia but on delay, Dan Moisand has some positive news for Australian advisers about the impact that fintech, and robo-advice in particular, is likely to have on their businesses.
The principal of the Melbourne, Florida, financial planning firm Moisand Fitzgerald Tamayo, and past president of the US Financial Planning Association, says he is “so sick and tired of hearing about fintech taking over the world, [in] every magazine and newspaper, day after day after day”.
“All [advice] firms are getting more tech-savvy,” he says.
“They’re using tech more efficiently. But we’ve been doing that my entire career – it’s just that the tech has changed.”
Moisand visited Australia in late August with 14 other financial planners from the US, on a study tour organised and hosted by Hari Maragos, principal of the Melbourne, Victoria, financial planning firm Victoria Wealth Management, and VFM’s practice manager Genevieve Rose’Meyer. Four members of the delegation took part in a round table discussion at Clearview’s head office in Sydney.
Adept at adoption
Moisand says technology has consistently improved advisers’ businesses over decades and will keep doing so. But it will be evolutionary, as advisers adopt new developments only if they improve the face-to-face, human aspects of advice.
“It has never been a threat to people wanting to relate to people,” he says.
“You hear this idea that you could be a specialist and people from around the world will flock to your door because you’re the specialist in this one area and the expert and you can have clients all over the place and do it in you pyjamas in your living room. That may be true, but we’re not seeing that happen at all.
“We’re seeing that it’s someone down the street, that wants to sit across the table and talk to another human being that cares about them – and technology does not care about you, it just does what it’s told.”
The humans are not dead
Moisand says robo-advice offerings initially attacked the financial planning market with highly automated and cheap offers, but now the most successful operators are those who have backed off quickest, and co-opted advisers.
“You can see some of it with Betterment, one of the bigger robos,” he says.
“They came out with guns blazing, direct to consumer as a real cheap way to go. And what have they done? They’re one of the most successful ones out there because they backpedalled faster than most of their competition to do two things.
“Instead of going direct to the consumer they’re coming to us. That’s where some of these firms are outsourcing. They’re outsourcing to Betterment institutional. And they’ve also added human beings, at a higher price-point, into the mix. It’s not us competing against 25-basis-point Betterment anymore.”
Time better spent
Co-leader, founder and principal of Sterling Financial Planning in New Jersey, Nick Nicolette, says the greatest benefit of fintech make the time advisers spend with clients more targeted and more productive.
“The wonderful thing about the advancements that we’ve all been able to leverage out of the technology is to be able to adapt and meet the client at their place – by that I mean, where they are in their life,” Nicolette says.
“We’re not presenting this bundle of numbers and documents; we’re able to leverage the tools we have to spend time talking about their lives. Having those tools and technologies and integrations creates more time for us to be, as Dan mentioned, face-to-face with people.”
Supported not supplanted
Nicolette says clients expect advisers to be supported by technology, not replaced by it.
“They want you to use all the things at your disposal and your expertise to help them along [their] journey,” he says.
“Technology has enabled us to go through and test so many other things that in the past we weren’t really able to go through: test life events; test how things might transition to future generations; and to run simulations – internally, not to sit with clients. They want us to be able to do those things and then say, here is what we can do and here is how it impacts you.”
Bonnie Suveerachaimontian, a wealth adviser with Worldview Wealth Advisors in San Francisco, California, says technology supporting advice firms has “really come a long way”, and robo-advice is assisting smaller advice firms to expand the range of clients they can deal with.
“We don’t view robo-advisers as a threat; we view it as a help,” Suveerachaimontian says.
She says fintech, and especially robo-advice, plays a role for low-value and therefore generally younger clients.
“That’s where the robo-advisers or the Betterments or the Personal Capitals find their niche and where their clientele really lives,” she says.
“It is the clients who are just starting out and don’t have assets yet, but they do need somebody in the background.”
The adviser’s true value
David Mirabito, a senior financial services executive with MassMutual, based near Syracuse in New York state, says the true value of a human adviser is proven when times are most difficult. Consistently rising investment markets mean advisers have not been called on to demonstrate that value for a while, but when markets turn down, human advisers will come to the fore and robo-advisers will be found wanting.
“In times of market stress – and we haven’t really had that for most of this decade; 2011 was a little difficult, 2015 was jittery – you want a person,” Mirabito says.
“You want a person who has at least taken some time to figure out this is what we see going on in financial markets.
“I’m a little guy in central New York State. I am not on a trading floor in New York [City] or Tokyo or London, but I have to have some type of understanding of what is going on in financial markets.
“People want that understanding, and we haven’t had to do that for a few years. Mostly, if you’ve been fairy fully invested, your assets have grown quite nicely in the past few years.