Last November, the Ivey Business School researched digital technology in the financial industry and released a report titled “Financial Advice in Canada: A Way Forward”.
The conclusions were reached by engaging a broad range of financial service participants who gave their views on how the industry will evolve.
According to the report, digital technology creates an opportunity for better advice and that the combination of human skills, augmented by technology, is the most likely evolution. “There are some tasks that are better performed by machines, while others only work in the hands of humans.”
Technology is a tool and when people have access to it they can provide better service, more efficiently.
A more automated process will need to be standardized, which is an advantage as it will lead to more predictable recommendations. However, that doesn’t preclude the fact that financial advice still needs the good judgment of an experienced financial advisor.
My observations of the financial services industry shows there are two types of clients. Those who want to have a personal relationship with an advisor in order to discuss their specific financial situation and requirements, and those who prefer to manage their financial planning and investments on their own.
Technological innovation will not change that.
As in many industries, what will change is clients’ expectations. They will expect more from their financial advisors. With innovation and evolving technologies some of the time-consuming tasks currently performed by an advisor can be automated, leaving more time to devote to clients.
If you think this is a fad, think again. Accenture reports that worldwide, $27.4 billion has been invested into FinTech (financial technology) startups in 2017, up 18 per cent from 2016.
Peter Watson is an agent of, and securities products are provided by, Aligned Capital Partners Inc. (ACPI). ACPI is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF). The opinions expressed are those of the author and not necessarily those of ACPI. Peter Watson provides wealth management services through Peter Watson Investments