The robots are rising (with humans by their side)

The future of wealth management will be shaped by powerful technologies alongside human expertise.

When thinking about the future of wealth management, we get lost in conversation about blockchain, AI and PSD2. But we rarely talk about hospital wait-rooms or crowded NHS clinics. I think we should though. Hear me out. Have you heard of Babylon Health?

It’s a popular “GP at your hand” service that is transforming healthcare. The company’s AI chatbot can make quick diagnoses and triage patients into video-linked GP consultations where patients get appointments within hours. This dramatically reduces the barriers to speaking with a GP, whilst lowering costs for the heavily-stretched NHS, and ultimately, the everyday taxpayer.

Everybody’s a winner. But why is this relevant to wealth management? An industry that is synonymous with paper forms and dusty offices. Because Babylon Health’s success in disrupting an outdated sector - by combining technology with human expertise - should be applied across the financial planning industry as millions of people still lack affordable advice and need to make important decisions on their investments, pensions, assets and more. Some FinTech subsectors have already come to the same conclusion.

UK-based Habito, promises to suggest “the best mortgage possible” by using a combination of digital and human nous. It compiles borrowers’ mortgage needs via an AI chatbot, and searches every mortgage available from 90+ lenders, finally guiding homebuyers through the rest of the process conveniently and affordably. Elsewhere in consumer finance, passive investing has been made easier by the likes of Nutmeg and Moneyfarm for tens of thousands of people in the UK, but access to human expertise is largely absent - and investors are missing out. What exactly is missing? It’s the human touch.

Which is especially important when bespoke advice is required for complex investment decisions that tie into delicate topics like tax, retirement planning and your family’s financial security.

Yet, with the average savings pot being just above £10,000 as of last year; most wealth managers or independent financial advisors, could never offer their services at scale. Fully automated services were once labelled as the democratisers of advice but have come short, with tepid uptake and the FCA highlighting their flaws in a public report. All to say, consumers are poorly served and the FCA’s advice gap remains stubbornly unsolved (for several years now). But why haven’t FinTechs come to the rescue?

Obsessed with scalability, lean cost bases and automation, the human touch never made the cut. On the flip side, traditional advisory firms that pride themselves on longstanding relationships still struggle with poor technology, frustrating processes and lousy digital experiences.There are few alternatives in between. But the tide is changing. More and more entrants in the UK are capitalising on this middle ground and are opting for a hybrid approach.

Like Fountain, a digital wealth manager offering regulated advice, pensions aggregator PensionBee, and Trussle, a mortgage provider that’s popular with first-time buyers. With new tech stacks in place, these providers offer engaging digital experiences whilst giving consumers access into human expertise when needed.

This approach dramatically cuts the cost of servicing customers and finally gives access to affordable advice. The broader industry is seeing the benefits of this model and is rightfully moving into a sweet spot defined by “flexible automation”. Imagine a customer experience that automates low-value, frequent, and costly services, whilst triaging customers into advisors for infrequent and high value decisions that require expertise.

Which portfolio is right for me? Go through an automated questionnaire. Should I release equity from my property instead of withdrawing from my pension?

Get paired with a financial advisor. And there has never been a more exciting time to combine new technology with human expertise to close the advice gap that is preventing millions of people from maximising their finances. For starters, we’ve seen AI/ML techniques tried and tested in other industries that can now be carried into the world of financial planning, like Babylon Health mentioned above.

Secondly, our ability to collect, digest and action large sets of data is reaching new heights. Aside from generic personal data, tech-focused entrants could capture and interpret behavioural data that paints an in-depth customer profile before they’ve had their first consultation call. That’s right, say goodbye to lengthy discovery calls and coffees.

The efficiencies are undeniable. But there’s more. Hybrid models still have room to go one step further as they restore the importance of human relationships. Advisors, equipped with empathy, can capture the subtle cues and emotions that are key to helping their customers on vital financial matters.

It sounds terribly old fashioned but they’re tapping into human emotions that simply cannot be captured by fully automated services. This customer portrait, gathered through different channels, enables better digital experiences alongside expert advice that is cheaper, better, faster.

Alas, solving for the advice gap may finally be in reach. The solution will be not too human, not too techie, but just right.