Has the "Robo-Revolution" made advice more human?

1. The better the question. The better the answer.
The better the world works.
A conversation with Canada’s financial planners
October 26, 2017
Has the Robo revolution made advice
more human?

2. Page 2
Today’s agenda
Global trends facing wealth management
Discussion themes
• The pivot to “hybrid” advice
• The slow march towards goals-based planning
• Using technology to enable operational efficiency
Wrap up
1
2
3

3. Page 3
The current state of advice has been shaped by a
number of broad trends impacting wealth management
TRENDS TO MONITOR IMPLICATIONS
TECHNOLOGY
• The incorporation of technology into all aspects of our
lives
• Increases in computing power and command of vast
amounts of data are driving a 4th industrial revolution
• The pace of robotics, AI, biotechnology and the internet
of things will drive unforeseen changes in the meaning of
work, leisure and prosperity

• Explore ways of incorporating
emerging tech
• Anticipate clients’ accelerating tech
adoption levels
• Prepare for successive waves of
FinTech experimentation
REGULATORY
• Increasing requirements for transparency in returns and
compensation (e.g., CRM2)
• Movement to “best interests” standards to reduce risks of
conflicted advice
• Scrutiny of the value of advice: cost vs. process,
appropriateness and quality
• Increasing regulation of financial planning and who can
use the title “financial planner”

• Anticipate a complete ban on
embedded commissions and
movement towards different fee-
based models
• Increased need for an industrialized
delivery model with flexibility to adapt
to evolving regulations
CLIENT
SENTIMENT
• Coming to grips with an economically stagnant future
• Concern for overall well-being (e.g., housing, longevity,
health)
• Increasing skepticism towards wealth industry combined
with proliferation of free online wealth advice and low cost
investments

• Invest in teams of talented advisors
to deliver specialized advice
• Shifting emphasis on empathy and
coaching over pure sales talent
• Develop new breed of outcome
oriented products within a more
transparent client experience

4. Page 4
Against this backdrop, we witnessed a wave of digital
advice providers enter the market from 2014-2016
The appeal of Robo-advice
► Lower cost
► Aimed at the underserved mass market
► Heavy emphasis on “emotional design” in
user interface
► “Democratized advice” through plain
language and simple easy to follow process
► Streamlined onboarding
► Low engagement requirements (e.g. “set it
and forget it)
► Heightened transparency

5. Page 5
In the past 12 months, we have seen a backlash against
the predicted digital-only future
Robo advisors
misjudged their user
base1
Some things cannot yet
be automated
► Tailored their offerings to the “digitally focused Millennial”
► Highest adoption is by higher net worth, older investors
► Digital offerings struggle to serve the more sophisticated needs
of these investors (e.g. product types, tax requirements etc.)
► Relationship management
► Customized wealth planning and investment strategies
► True suitability analysis and client profiling
► Client servicing and coaching
1EY Fintech Adoption index
Digital advice providers are quickly adapting their business models to provide a B2B service
• Providing the technology and white labeled service directly to advisory firms
• Used by firms to accelerate their digital offerings
• WealthSimple for Advisors
• Nest Wealth Pro

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This has led to the rise of Advice 2.0 – the hybrid
advisor – human interaction enabled by technology
► The robo trend has pushed traditional financial firms to be more creative in the way
they provide advice
► To demonstrate their value over robos, advisors are focusing on areas of differentiation
Technology
► Robo advisors have acted as catalysts to
boost investments in technology
► Establishing in-house digital centres of
excellence
► Partnerships with technology incubators and
accelerators
► Investments in Fintech start-ups and venture
capital funds
► Renewed financial commitment to upgrading
investment and advice platforms
Talent
► Clients are looking for different characteristics in
an advisor than they did in the past
► Less focus on product sales, and more emphasis on
advice and coaching
► Does my advisor understand my objectives?
► Does my advisor have my best interest in mind?
► Can I trust my advisor with my financial health?
► Do I have enough touch points with my advisor?
• How is your organization integrating appropriate technology capabilities into human advisors’ daily
processes which would potentially make them as efficient and automated as robos to provide even
better service?
• Have you seen a change in the skills required when your firm recruits advisors? What is being
demanded in terms of technology support by advisors you are trying to recruit?

7. Page 7
Goals-based wealth management, long discussed, has
now been pushed to the forefront of advice delivery
Suitability of advice needs to
be defined for each goal
depending on goal attributes
and client preferences.
Risk management needs to
be done individually for each
goal. Every goal has it’s own
risk tolerance and capacity.
Monitoring for market
performance needs to be
accompanied by monitoring
for client actions and goal
achievability.
Investment proposal need
to utilize default model
portfolios and be integrated
with trade execution.
Financial planning and
investment analytics need
to focus on providing
advice with a defined
certainty for each goal.
Investment
Proposal
Analytics
Supervision
Monitoring
Goals
Suitability
GBWM means putting your client’s goals at the center of your wealth management process to make it a
seamless and evolving experience for your clients across onboarding, planning, investing and monitoring.
Wide variety of product types
should be available to
construct a portfolio for each
goal within multiple accounts
taking tax optimization into
consideration.
Portfolio
Construction

8. Page 8
To adjust to evolving roles, advisors will need to take
advantage of technology to optimize their efforts
Wealth
Manager
Robotic Process Automation (RPA)
• Client reporting
• Suitability
• Onboarding
Big data and analytics
• Trend analysis
• Portfolio monitoring
• Campaign management
Artificial Intelligence
• Sentiment analysis
• Predictive analytics
• Chatbots
Social media
• Relationship management
• Outreach, prospecting and brand
awareness
Web/Mobile based tools
• Compliance
• Cost reduction
• Performance tracking
Technology and tools are changing the ways that
human financial advisors:
► market themselves
► interact with clients
► optimize processes
► develop/implement investment strategies
► Where do you see the most relevant
application of these technologies in financial
planning?
► Has your organization begun to implement
any of these?

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Thank-you!

10. Page 10
EY contacts
Name Contact Number Email
Gregory Smith, Wealth Management Advisory Leader 416.943.4593 Gregory.Smith@ca.ey.com
Dave Inglis, Wealth Management Advisory 416.943.3831 Dave.Inglis@ca.ey.com
David Hurd, Wealth Management Advisory 416.943.4429 David.Hurd@ca.ey.com

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