Advances in smart technology are changing the way we gather, analyse and interpret data but this does raise questions on how it might affect the advice process.
The term robo-advice is one which is causing a buzz across a number of sectors and is also clearly casting a large shadow over the mortgage intermediary community. Recent research from Legal & General Mortgage Club found that over a third of brokers felt that the biggest future threat to their business came from robo-advice and technology.
So is this concern justified?
There is no simple yes or no answer but we can’t ignore the continued impact of technology.
Set up in October 2014, the FCA-backed Project Innovate has demonstrated its proactivity within this area by supporting the introduction of forward-thinking financial products and services to the market. This has recently been followed by the launch of an advice unit aimed at helping firms in the setting up of automated models to offer low-cost advice to consumers. Mainly serving gaps, identified by Financial Advice and Markets Review (FAMR), in the investments, pensions and protection sectors, it is a clear statement of intent.
Talk of increased automation and robo-advice will naturally put some intermediaries on edge whose business has been established on the back of personal connections and many years worth of training, accumulated knowledge, contacts and experience. However, especially within the mortgage market, robo-advice is a term which can easily be misinterpreted.
Some mortgage intermediaries may latch onto its perceived potential to devalue client relations and weaken future business volumes. Then there are others who can visualise the benefits attached to streamlining and simplifying some elements of the mortgage journey for them and their clients. The community of mortgage intermediaries is rightly proud of the importance attached to the advice process and the expertise behind it. However, this doesn’t mean that it hasn’t, can’t or shouldn’t evolve in parallel with changes to client and consumer behaviour.
The development of sourcing systems is a perfect example of how technology can help simplify the advice process. Alongside this, more effective communications channels have also opened up via text updates, emails, case tracking and innovations such as Skype – among others. And these have not detracted from even the most tech savvy of borrowers needing some level of advice from a trusted source. A feature especially apparent within the mortgage market where a level of complexity and lack of understanding will always exist among borrowers.
A clear balance must be attained. The best intermediaries will constantly take a broader view on how to best service the needs of their clients, whatever form this may come in. Even the most advanced artificial intelligence systems will never usurp the values attached to a good, professional holistic intermediary offering. However, incorporating some elements could offer the potential to match the needs of a greater number of clients in a more effective manner.