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How technology is changing wealth management

Whether it is a threat or an opportunity depends on your perspective.
Erol Zeki, CEO of Sasfin Wealth. Picture: Supplied

Their business models seem so simple and yet companies like Uber and Airbnb have built multinational businesses through the use of technology.

Considering how easy these firms have made it to book a taxi or accommodation in countries all over the world, one can understand why consumers increasingly prefer to use internet-based tools to simplify everyday tasks – often saving time and money in the process.

The investment world is no different. Robo-advice is but one small part of the broader fintech landscape, but it has already made a major impact on the investment space through improved access and by allowing investors to plan for specific needs without the use of a traditional advisor. Technology has also made pricing more competitive.

According to Accenture, global investment in fintech ventures tripled from just over $4 billion in 2013 to more than $12 billion in 2014.

Against this background, commentators warn that financial advisors and wealth managers will need to adapt their business models in order to stay relevant.

For wealth management businesses who ignore technology, it is certainty a threat and a growing one at that, says Erol Zeki, CEO of Sasfin Wealth.

But where these firms see technology as an opportunity to improve their offering and embrace it, it can open up great opportunities, he adds.

While some commentators have gone as far as to argue that robo-advisors will replace traditional financial advisors in future, Zeki says technology is an enabler of wealth advice – both locally and globally. This does not mean that it has to be completely self-directed financial advice.

“What we are seeing globally is a trend towards [traditional] advisors using technology more and more in the process of furnishing advice to individuals and other clients.”

The trend is also prevalent in the South African market and a number of platforms are now in operation that can assist clients with making investment decisions with the help of an advisor.

“I don’t necessarily think that the world is yet at the place where you need to separate a human relationship from technology. I see technology as an enabler of the human-being giving advice to people.”

While he expects that a small portion of the market will prefer to invest using online platforms and technology without the help of a wealth manager or advisor, Zeki believes a larger portion of the market will prefer to operate in a hybrid space where a combination of a human advisor and technology will offer a holistic financial solution. Ultimately a client’s needs will determine whether he or she will be most comfortable with a 100% online solution or whether they will require some human interaction.

He likens such a hybrid solution to the use of private banking services. Many people have a private banker, but they don’t require the banker’s assistance every time they transact. For many of the services provided by the bank, the client will use the app or website. However, if they want to buy a house, transfer money offshore or access specialised services, they want to speak to their private banker.

“I think that there are a lot of services that are currently being provided by wealth advisors that technology can cater for, but a lot of people still want a wealth advisor there to help them with the big decisions.”

But the changing landscape also means that many advisors and wealth managers will have to consider their value proposition.

“The days of just doing pure asset allocation and choosing a few funds are probably passing. I think there is going to have to be a lot more value add from financial advisors going forward and a much deeper understanding of their clients’ needs,” Zeki says.

This includes financial as well as aspirational needs. Some people may want to go overseas on a regular basis or want their kids to inherit money whilst others may deem it important to contribute to their grandchildren’s private school education.

“People’s lives and their true needs are fairly complex and I think that financial advisors are going to have to have a much more holistic view of their clients’ needs going forward, for them to add true value in terms of a financial plan.”

Zeki says any advice – whether it is given by a human advisor, using technology or via a hybrid solution – has to reassess an individual’s needs on an on-going basis and adjust the plan accordingly.

“Advice is an on-going process. It is not a once-off product sale.”

Brought to you by Sasfin Wealth.


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Here’s what I find so wrong with this article:-
$ Because financial advisors are hooked to a company there is every likelihood that these salespersons will push company products ahead of other more appropriate products to the client
$ If the company structured and wrote the robot product is it only scanning company products or all available products
$ Uber and AirB&B are not as unique as you would expect they are just clever marketers. Neither of these companies will give you an option to scan/compare against similar operations as they want to keep everything inhouse and push their own affiliates
$ If you are seeking wealth management these companies do not know how the robot accesses information (probably force fed from a questionnaire) does it track the ALSI and or the Top40 or both since the creation of the JSE and does it hold peaks and troughs by year, decade, century. Does it also warn/raise red flags as to which months are more likely to experience peaks and troughs

There are many other criteria which need considering, yet these companies talk about the warm and fluffy stuff, and mislead clients because they know nothing about nuts and bolts
As one of my mates would say this is pure bollocks

Financial advice is such a broad term that even a dumb robot could help in many cases. The typical example’s of saving money for education or overseas holiday can be done by using a spreadsheet to subtract your expenses from your income and investing the difference in one of the pre-defined company products. Advisors often focus on financial planning and leave investment planning to the different Fund Managers or companies they work for. A good investment robot on the other hand could use all the data available at Morningstar, Fundsdata etc. to design a balanced portfolio that incorporate all asset classes over different continents. Very few financial advisors would however be happy with a robot that advise against their own company or products. Just another smokescrean to show they embrace technology.

Tamir Zoltovski (co-founder of Moneta International UAB) says, ” The investment globe is no different. Robo-advisors are one small part of the broader Fintech landscape that made a great impact on the investment space through enhanced access and by allowing investors to plan for particular needs without the use of a conventional advisor. Technology has even made pricing more competitive.”

End of comments.



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