Improving efficiency through ‘semi-automated robo-advice’

Appearing on the latest episode of The ifa Show, experienced financial services executive Tony Beaven argued that robo-advice and automation have a role to play in helping to bridge the gap for those wanting to access financial advice but are unable to afford it.

Speaking of his time working for Elders Financial Planning IFA Network in Adelaide, Beaven explained how he used technology to automate communications to clients to enhance their education and engagement with the company.

“When I was in Elders, I wanted to actually communicate and to have a communication with our clients and our advisers, who are also our clients,” Beaven said.

“So I called in this automated digital marketing agency, and they worked together with me to build digitised, automated newsletters, because I could see that we’ve got a massive gap between reaching out to our clients and making sure that they had educational, not product provider stuff, but educational material on a regular basis that really resonated them with them.”

In doing this, Beaven said he also realised the potential to use a similar strategy to attract younger clients and increase interactions with low-contact clients, at minimal cost to the company.

“As we did this, we realised that wait a minute, we need to attract new intergenerational clients. So your digitally savvy, your Gen Zs, the younger generations that are going to be our new clients, our new customers that want more information at their fingertips,” he said.

“So we built this automated system and it was like $400 per month, but we increased our referrals by 25 per cent and we were getting clients that were going, ‘Wow, wait a minute, this educational material is absolutely brilliant. I’ve just resonated about this strategy for superannuation, end of tax year, etc, on that side of it’.

“We also then looked at our back book, so our risk insurance book, which was just sending out renewal notices to clients, but you’ve never had any real contact with them. So we got the email addresses and we put them in, and within three minutes you can actually build a newsletter, press a button, it goes out to every single client and then all of a sudden they get educational material.”

He explained that advisers should be looking for ways to employ this strategy into their business processes, believing there is potential for employing semi-automated robo-advice to improve efficiency.

“I think when you actually look at all this and you go through this whole advice process step by step, then all of a sudden, you start to look at ways that you can streamline the efficiencies in your business and build in a business that is, I’d say, semi-automated robo-advice,” Beaven said.

He said that this technology can also be employed to provide some guidance and portfolio development for clients wanting help at a lower cost or who prefer to function more independently, provided the proper compliance measures are in place, having done so already in the UK.

“The question of being full robo-advice is always an intriguing one, because even in the company I worked at in the UK, the next step for us was to have our own portfolio. So balanced, aggressive, conservative, portfolios that were set portfolios, etc,” Beaven said.

“That would have meant disclosures to the client to say, ‘Well, wait a minute. Yes, this almost is like an execution-only piece in a sense. But we’re letting you know our disclosure that we’re a restricted company and we’re doing our own portfolio. So you can choose this portfolio of investments’. And that would have been the next stage of the robo-advice.”

However, Beaven explained that many clients were still wanting to consult with an adviser prior to full execution, but that this level of automation could play a significant role in making the advice process more efficient and thus more affordable for clients.

“But what we found is there may be one or two clients that want that and want to make their own decisions, but a lot of them get to that stage where they learn all the education, they get through all this process, and then all of a sudden, they want still to have a conversation with an adviser at that last stage,” he said.

“If you think about the whole of the advice process, you could literally automate a lot of the information. A lot of your, should we say, non-client facing meetings. And even the client facing meetings can be over Zoom, which we’re using today, Zoom business, you’ve got all the information there. You can do back-ups, you can use it for compliance, governance, no file notes.

“So what you can do is when you start to analyse every part of your advice business, you can create efficiencies that will really reduce the cost involved in this. And we were charging probably about $600 for an advice document, etc, from that side.”

However, Beaven said that “there has to be a freeing up of the regulation and legislative conditions” before this is a legitimate possibility in Australia.

To hear more from Tony Beaven, tune in here.