Reforming financial advice


Perhaps the biggest misconception about financial advisors is that they are essentially salespeople. When perceived that way, it’s instantly grounds for a lack of trust in the financial advisor. But the financial advisory profession is meant to be so much more than sales. Ideally financial advisors help people navigate life’s risks and achieve their financial aspirations, and ultimately, live in the way they are accustomed to, for life.

The financial advisory industry is very traditional. The way it works has been the same for decades; processes are ingrained. The industry needs an overhaul to finally make credible progression to close the perennial issues and address both protection and retirement gaps. It takes teams of actuaries, quantitative finance experts, data scientists, computational engineers and industry veterans to come together for the common good.

Not only is the industry ripe for change, the way that financial advisors work also needs disrupting. We need to earn back the trust of consumers.

When worth their salt, advisors love talking to people and are driven by success more than money. They come in different shades – some like to give advice, others to do business development. Yet most engage in building and maintaining existing relationships. The best ones consider the long run and help you to comprehensively grasp that the financial plan you’ll execute is part of the scheme of realising your personal, long term, financial goals. 

It’s difficult to imagine how technology could enhance financial advisory. But it can. 

Technology can reduce the reliance on manual solutioning, analysing more quickly than a human can and, based on an individual’s preferences, goals, and financial needs, can almost instantly determine what products and their configurations are the best fit for your comprehensive financial wellbeing. 

Technology can verify the viability of the recommendation, rigorously simulating, realistic and relevant scenarios by taking your data and interrogating decades of insurance statistics and market data to build a picture of what you, as an individual, may experience in life. 

And that builds trust. When the proposed solution and the verification process is made transparent, the customer feels in control. Ironically, trust is earned when the customer does not need to blindly rely on the expert adviser. 

Even before the pandemic, which has brought changes to their work flow and the manner in which they communicate with their customers, financial advisors faced some unique challenges, such as convincing a young customer that there are no shortcuts to financial independence. 

Individuals themselves are often unprepared for the intrusiveness of the process to determine their financial needs, even when financial advisors are willing to help. Things like an unwillingness to change bad habits, a lack of engagement, or reluctance to provide all their information; and a lack of commitment to take the time to do it properly, not provide accurate information, or all the necessary data, are what inhibits a financial advisor to provide apt advice. 

The missing element is the customer’s motivation. Goal-based planning has, at its premise, the assumption that people have goals they aspire to achieve. Aside from fulfilling obligations, most of us are on the lifelong journey to figure what we want. While aspirations are fleeting, the mind-numbing numerical exercise one has to go through often highlights more gaps than solutions. 

Faced with this quandary, technology can help. It can predict a customer’s needs with a few non-intrusive personal data points  comparing them to an abundance of statistical data. With simple profile insights obtained in advance, technology can help a financial advisor to navigate the conversation, and to motivate the customer through participation – interacting with a simulation that is based on the customer’s life in the present and predicted future.

Technology can also help financial advisors condense the process from query to quote. It takes away laborious paperwork. In fact, for one insurer, the query to quote cycle lessened from three weeks to ten days, and now it can even be done in minutes. When previously an application consumed two hundred pages of paperwork per application, now fewer than fourteen pages are needed, saving at least 5,000 trees annually. And technology helps insurers to create omni-channel distribution, effectively enabling advisory to be available at any time, anywhere.

Building technology to revise the financial advisory requires a holistic approach. There’s a lot of sensitivity required to adhere to compliance, to automate the sales process, and to transform what traditionally has been a product-push and oft uncomfortable exercise for customers into a seamless process that assures and motivates them instead. It can be done. Evidentially, digitizing the financial advisory process helps people to understand what they are buying, which translates to the purchase of more comprehensive packages.

When the person who is building the software truly understands the business, these, and scalability, are just some of the assets that a financial advisor will walk away with. The whole value chain, from customer, to advisor, to the business, benefits. Along with the environment.

This is how we, at 360F, are helping banks and insurers to transform the financial advisory process. We remember the financial advisor’s true value. We seek to help them enhance the way they counsel the person, not the portfolio. We give the customer the means to make balanced, self-evidently apt choices for their long term financial benefit.

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