1.
JUNE 2017
Prepared by Russell Hutchinson
Please refer to the copyright information on the final page before copying or distributing
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INSURANCE ROBO-ADVICE IN NZ
Situation Review and Future Prospects

2.
ROBO-ADVICE DEFINITIONS
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“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.
ROBOTS YOU CAN USE NOW
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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.
THE PROMISE OF ROBO-ADVICE
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• 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.
LEGAL STATUS
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“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.
LIKELY REGULATIONS
6 www.chatswood.co.nz
• 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.
THE TECH WE’RE EXCITED ABOUT
7 www.chatswood.co.nz
Watson
Voice recognition
Wearables data
Quotemonster
Blockchain
RealMe
Jude.io

8.
THE NEED FOR ROBO-SERVICES
8 www.chatswood.co.nz
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.
ROBO IDEAS FOR INSURANCE
9 www.chatswood.co.nz
• 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.
But will the robot steal your job?
10 www.chatswood.co.nz

11.
PROFESSIONALS GET BETTER ROBOTS
11 www.chatswood.co.nz

12.
PROFESSIONALS GET BETTER ROBOTS
12 www.chatswood.co.nz

13.
NZ ADVISERS EXPLORING ROBO-ADVICE
13 www.chatswood.co.nz
• 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.
ADVISER PROJECTS
14 www.chatswood.co.nz
• 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.
VISION
15 www.chatswood.co.nz
• 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.
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 www.chatswood.co.nz
Our team includes:
Strategy, sales and
marketing consulting,
research
Industry and compliance
consulting
Business development
manager

17.
17
THANK YOU!
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Visit us at
www.chatswood.co.nz25
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