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Introductory - robo advice for insurance financial advisers


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Robo advice: a quick review of the legal, process, development, and conceptual ideas for robo / online services for insurance-focused financial advisers in New Zealand.

Published in: Economy & Finance
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Introductory - robo advice for insurance financial advisers

  1. 1. JUNE 2017 Prepared by Russell Hutchinson Please refer to the copyright information on the final page before copying or distributing INSURANCE ROBO-ADVICE IN NZ Situation Review and Future Prospects
  2. 2. ROBO-ADVICE DEFINITIONS 2 “Can enable a compliant personalised advice recommendation to be made without the requirement for a human adviser to be responsible for the advice” • robo ‘nearly advice’ – best example: LifeDirect • ‘nearly-robo’ advice – some adviser tools are like this, Quotemonster is one • ‘technology enhanced advice’. – some great service include kiosks and Suitebox • 'robo-to-advice' uses combinations of tools to help clients self-qualify, or complete aspects of the advice process themselves, to bring them better prepared into an advice- giving discussion with an adviser. There is a lot of room for development of effective services in each of these areas. We are very interested in developing services for advisers in the last category.
  3. 3. ROBOTS YOU CAN USE NOW 3 History: • Originate as portfolio management tools • Tend to be offered by companies selling direct • Compliance drives some of these projects Look up these: • Schwab • Betterment • Futureadvisor • LifeDirect What you will find: • Assumes behaviour change • Very little ‘why’ or motivation • Narrow scope goal • Directed approach • Escape lanes
  4. 4. THE PROMISE OF ROBO-ADVICE 4 • Save money – when you achieve scale they are cheaper than humans. • Increase access – allow more clients to reach a product avoiding a slow human process • Control compliance risks – robo-advice is controlled and not subject to human error. However actual robo-advice failures are usually systemic and may affect large numbers of people. • Help clients find the right channel – because there is a big shift to commencing the sales process online, robo advice can act as a series of gates to ensure clients are directed to the best channel to meet their requirements. • Improve offers – bundling a particular form of advice with the product may improves the whole package for the customer
  5. 5. LEGAL STATUS 5 “Can enable a compliant personalised advice recommendation to be made without the requirement for a human adviser to be responsible for the advice” • Therefore not legal in New Zealand under the Financial Advisers Act 2008 • Exemption from the law being consulted on in June 2017 • Individual exemptions likely • Full-robo permitted under the Financial Services Legislation Amendment Bill which may be law in late 2017, with a transition period to full implementation of around two years • A robo-process may be legal provided a financial adviser is responsible for the advice. That adviser must be a natural person • …but many of the adjacencies are: • Nearly-robo advice • Nearly-advice robo • Technology enhanced personalised advice
  6. 6. LIKELY REGULATIONS 6 • FMA concerns that will need to be addressed in regulations: • Financial literacy • Escape lanes • When the client is unsure • Final checking • Why policymakers and regulators will support robo-advice: • Licensing organisations (now QFEs, future FAPs) is more efficient • They get to manage to a document – the licence conditions, not to principles, which are harder to interpret • They get to manage algorithms and system logs, rather than conversations and memories • Regulatory risks: • A risk of excessive regulation of ‘calculators’ • The risk that there won’t be a law change • Caps and category limits
  7. 7. THE TECH WE’RE EXCITED ABOUT 7 Watson Voice recognition Wearables data Quotemonster Blockchain RealMe
  8. 8. THE NEED FOR ROBO-SERVICES 8 Most robo-services will be about the pathway to advice, assist in advice generation and delivery, and improve ongoing advice services. It can make good advice available to more people at less cost. Direct No Advice Broad Financial Advice Single- Need Advice Robo- Services Face-to- Face No Advice Call Centre No Advice Advice to large low- value groups Prospect- to-advice pathways Call centre advice guides Prospect qualification tools Online advice Financial literacy Online advised sales
  9. 9. ROBO IDEAS FOR INSURANCE 9 • Enhanced engagement with consumer • Sorting clients to the right channels: Seamless passing between online- direct, call-centre-direct, face-to-face advice, and others and Managing leads flow from your website to advice channels (internal, owned, alliance, or third-party) • Upselling from: KiwiSaver, or other low value direct, travel insurance, life- only, mortgage insurance – you name it, to full personalised advice. • Serving orphan clients: especially those that you have no current address for who will look for you first online • Providing advice to clients with access problems: time-poor, overseas/remote, don’t like advisers
  10. 10. But will the robot steal your job? 10
  13. 13. NZ ADVISERS EXPLORING ROBO-ADVICE 13 • Every week an adviser approaches us with ideas for online services – but don’t call them a robot! • New comparison tools are opening these opportunities up • New needs analysis tools make online advice more possible • Automating annual reviews makes it safer for an adviser to help more people • There are lots of other ideas to work on
  14. 14. ADVISER PROJECTS 14 • Use simple robo-to advice widgets to enhance your web and social media presence: • Pricing widget – helps clients stay because they’ve done shopping • Simple forms widgets - encourage clients to engage and self-qualify • People like us – a referral tool that creates leads • Auto-renewals – reduces the work at renewal time, and creates new appointments • Use more technology to enhance compliance and save time in developing your recommendations and writing SOAs • Start to map your advice processes • Use tools like head-to-head, simple needs analysis, and underwriting requirements • For bigger projects, contemplate plugging in other resources such as Call centre, webmail, online lead generation systems and more
  15. 15. VISION 15 • That all of you can benefit from robo-to-advice and robo-nearly-advice tools to make your job better / easier / and quicker • The customer will love all that and can collect information and self-qualify and self-select the right channel for their purchase process – and get better and better advice with the optimum combination of systems and people • We can get capture and manage data to allow for continuous improvement in the sales process
  16. 16. CHATSWOOD CONSULTING Chatswood Consulting Limited specialises in providing marketing, distribution, and product development services to financial sector companies: insurers, fund managers, banks, financial advice firms, and industry associations. Chatswood works with companies to develop and manage new marketing opportunities channels for financial services business. Russell Hutchinson Rob DowlerKelly Pulham 16 Our team includes: Strategy, sales and marketing consulting, research Industry and compliance consulting Business development manager
  17. 17. 17 THANK YOU! © Chatswood Consulting Limited Visit us at This report is a confidential publication. This material is Copyright. No reproduction permitted in whole or in part except without the prior approval of Chatswood Consulting Limited. Public reference to material in the report requires reference to Chatswood Consulting Limited and must be sought and received in advance. While every effort has been made to ensure the accuracy of the information contained in this document, Chatswood Consulting Limited takes no responsibility for actions undertaken by readers that may have been made either in whole or in part on the basis of the information contained in this report.