“The great thing about today has been that all the conversations were about meeting customers’ needs and not products” – was how one delegate chose to describe the D2C and Digital Conference yesterday. The event was all about self-directed investment, the future (if it has one) of robo-advice and digital engagement with investors.
People will have virtual PAs within two to three years predicted Martin Talks of Digital Detox. The progress of robo generally is unstoppable in our lives – with even fridges giving us advice. The enemy of the good life is friction and the aim should be to rid people of this time wasting and inertia-inducing phenomenon. Causes of financial friction include legacy systems as well as legacy attitudes.
Artificial intelligence will be narrow meaning focused on one specific task like robo-advice. Daniel Egan from Betterment, the ‘original gangster’ of US robo-advisers, described how the insights for behavioural finance were being used to reduce friction. Consumers are being nudged into better financial behavioural patterns – saving more for retirement, and not rushing to sell investments in downturns. Robo functions can help cut such withdrawals drastically, for example with prompts that remind clients of their potential tax liabilities after they sell – we all hate even small tax bills regardless of wealth.
Bruce Moss of eValue reminded the audience that most of the US robos would not pass regulatory muster in the UK. In his view, customers should be given a choice of options: self-directed planning with no help; robo with automated guidance and the full monty of traditional regulated advice.
How will companies address the exploding use of chat apps? The approach favoured by Graham Odds of Scott Logic was “conversational commerce” – the use of automated messaging using such channels as WhatsApp to engage and inform customers. A theme that was developed further by the BBC’s Dmitry Shishkin, who talked about commissioning a Panorama documentary on Snap Chat but also how consumers like in depth written content on a small screen when they are in a different frame of mind.
Daniel Godfrey, late of the Investment Association warned of the price paid by consumers for their loss aversion that led them to choose excessively liquid and low volatility investments for long term accumulation. He says there is a silver bullet for investing and it is for investors to have a long term horizon.
In a thirty year career in D2C John Spiers (founder of Bestinvest and now of EQ Investors) has made some monumental technology decisions but he is doubtful as to whether it would ever be possible to dispense with some direct human contact with customers, especially about such matters as the complicated and risky process of asset decumulation in retirement.
In times of great political turbulence, don’t expect any less change around the way that we need to adapt to engage with the consumer of today and tomorrow.