Fighting tech with heart and empathy

Canva has made design easy, accessible and convenient for anyone to use. Afterpay has revolutionised consumer credit, removing interest and making credit more accessible. And Atlassian has digitised teamwork, making it possible to collaborate and work with anyone anywhere in the world.

Software is changing the world we live in, reducing costs and improving accessibility. The financial advice industry is no different. It’s just been a bit slower for disruptive technologies to gain significant traction in Australia. But, if we look at the rest of the world, we can see disruption is just moments from our door.

The race to the bottom

Technology (especially automated, intelligent software solutions) can cause a race to the bottom. It often commoditises complex, tedious and time-consuming tasks using machine learning algorithms to automate the process altogether. And, we’re increasingly using machines for “below the line” activities in financial planning.

Below-the-line activities are typically where the adviser “pay day” has lived. For years, it’s been tied up in product, whether it be talking about money, investments, insurance or mortgages. It’s where advisers have been showing their clients their expertise, knowledge and prowess in navigating the complex financial environment to “beat the index”. 

However, computer software is getting better at understanding the complex financial landscape at scale and making the right decisions a routine for their customers. And, it is firmly taking hold in markets such as the US and UK.

Some years ago, I spent two days in Philadelphia with Vanguard’s Advisory Services, which has accumulated 30 million investors since its launch. Its smart investment algorithms can stress-test portfolios against thousands of possible scenarios. It pairs Vanguard’s solid fund line-up with technology to design customised financial plans for clients instantly and at a significantly lower cost than anything that has been done before. CFPs (certified financial planner) are available on the other end of any digital medium for a fee of 30 bps (basis points).

And, it isn’t the only investment platform out there aiming to take the below-the-line lunch away from investors. Even micro-investing platforms like Raiz and Spaceship are gaining the trust and custom of the younger generations, as they look for cheaper alternatives to invest in their future. 

Additionally, as open banking matures in Australia, software will be able to compare financial products instantly. Open banking has the potential to allow financial institutions to offer real-time and instant switching recommendations so consumers can maximise their wealth potential.

Stop focusing on where you can’t win and win the hearts of your clients

Even if you are as good as Michael Burry in predicting the markets, the machines will eventually outperform. They can just process so much more information instantaneously than humans can. We are no match. So why should advisers even focus on beating the machines? Let’s hand it over to them and complement algorithms with what we have by the bucket load – the ability to empathise and understand our clients.

Heart and empathy are why our clients turn to us, and the software we use needs to pivot to support this and not product. Clients want us to help them determine their guard rails and financial strategies to help them live their best lives. They want to know you understand what they want to achieve, what is important to them and who matters in their life. And then build the plans, accountability processes and support networks that help them attain their goals.

Everything we do must centre around the client and how we can deliver on the promise of advice. For instance, how can we, as a profession, deliver on the promise of advice unless we deeply understand what drives people in their lives? Why can’t that fantastic first date we go on with a new client be the experience across the journey? Why have we let others control our client experience? And why can we not bring the stuff that really matters to life?

We know clients do not tell their friends about alpha, but they will tell their friends about the incredibly deep engagement they have with their adviser. 

How to win the hearts and minds of your clients?

This shouldn’t be a challenging question for most advisers. We have an innate ability to question and understand our clients. We create a compelling document that tells us everything we need to know – a document more commonly known as the file note. But, unfortunately, this gets locked in a filing cabinet or destroyed by translating what we care about in life into a product. 

That’s not who we are. It’s time to bring the file note out of the draws and into life, showing that this is where our actual value lies. Where we understand what the client values in life, extrapolating their values into life goals and the financial strategies required to achieve their best life. Where the client scopes the advice for us, where compliance is solved by listening and serving, not selling. 

We then provide the accountability and discipline the client needs to achieve them. Keeping them on track and focused. If things go wrong, we listen and understand why they went wrong. We empathise with them and work out what we can do to keep them on course for their best life. When things go right, we celebrate with them as a true partner in their success.

We’ve all got it in us. It’s why many of us took a job in financial planning. To help as many people as possible shape and sustain extraordinary lives. But along the way, we have been distracted by product and the need to show our value based on financial product expertise. 

If we continue down this path, we will have to become as brilliant as the machines. Our clients will continue to educate themselves on financial markets, thanks to the internet, making our interactions bogged down in detail rather than setting a life-changing strategy. And, we will have to lower our prices to beat the accessibility of digital products.

Or, we could place value in the strategic advice we deliver. Charging for our ongoing support in leading the lives they dreamt of and our problem-solving abilities, rather than taking a percentage of their wealth. Wealth that they may very well want to spend on their family, friends or community.

Clients, when asked, tell you about their families, friends, communities and experiences. This is where we as an industry need to compete by bringing their lives to life.

Advice has always been about showing the heart, empathy and understanding to allow clients to live their best lives, no matter what life throws at them. This is what differentiates us from the machines and will be the new playing field for years to come as financial advisers become the trusted and go-to resource for clients throughout their entire lives.

Santiago Burridge, chief executive and founder, Lumiant

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.