One development that’s received a lot of airplay of late is robo-advice, which uses artificial intelligence to – proponents claim – provide access to expert investment advice at a much lower cost. But Audere Coaching and Consulting’s Founder, Stewart Bell, says advisers shouldn’t lose any sleep over the trend.
“It’s not robo-advice it’s robo-investment,” he says, likening it to the difference between downloading a $10 fitness app that outlines some exercises and hiring a personal trainer that can keep you motivated and accountable.
There’s probably no greater buzzword in fintech these days than blockchain, which first entered the zeitgeist as the technology underpinning Bitcoin and has been spruiked as having the potential to revolutionise the global financial system.
Based on decentralised ledgers, the technology is already starting to prove itself useful in some areas, including fraud detection. This is because every transaction ends up being registered on hundreds of ledgers, so it becomes much easier to identify discrepancies.
However, Bell says the technology is some way from reaching its full potential.
“Blockchain is an incredibly powerful technology. The question is whether we’ve found a use for it yet,” he says.
3. Virtual reality
Global fund manager Fidelity made headlines a few years ago when it unveiled a proof-of-concept virtual reality app called StockCity. The idea was for investors to be able to physically walk through their portfolio, with individual investments displayed as skyscrapers. It was impressive to look at but, four years later, virtual reality is still a novelty in the financial advice sector, yet to take off as a practical tool.
Bell questions whether the demand will ever really be there for virtual reality. Successful innovations, he says, solve problems in the market place and it’s not easy to see what that is with virtual reality.
“What real-world problem is that solving? Who woke up one morning and said: ‘You know what I need in my life, I need a virtual fly-through of my portfolio?’,” he says.
4. Gamified risk profilers
Traditionally, risk profiling involves giving clients a list of questions designed to measure their attitude to risk. But that approach has its flaws, explains Bell, because respondents may answer questions differently precisely because they know their tolerance to risk is being measured or because of various other factors affecting their mood on the day.
Some believe the process could be improved through gamification, such as the French company Neuroprofiler, which asks respondents to play a five-minute game, rather than fill in a questionnaire. The idea is to measure the players’ intuitive responses, instead of simply asking them what they think, to build a more robust risk profile.
That technology is still being tested but Bell believes the greatest potential for gamification lies elsewhere.
“I think gamification is incredibly powerful, the question is how can we use it so people are rewarded for managing their money?”
Want to keep one step ahead? Sign up for our monthly enewsletter, full of insights and tips to help you in your day-to-day.
Important: This article has been prepared without taking account of the objectives, financial or taxation situation or needs of any particular individual. Before acting on the information, you should consider its appropriateness to your circumstances and if necessary, seek appropriate professional advice. Any information used in this article is for illustrative purposes only. Audere Coaching and Consulting is an external entity that is not a member of the Commonwealth Bank of Australia Group of Companies (the Group) and the content or any view expressed by Audere Coaching and Consulting and its employees does not represent an endorsement, recommendation, guarantee or advice in regard to any matter. CBA, nor members of the Group accept any liability for losses or damage arising from any reliance on external parties.