Future of Finance


Cost-cutting or client service is a bogus dilemma, Wealth Wizards tells wealth managers

Cost cutting or client service is a bogus dilemma, Wealth Wizards tells wealth managers

Wealth management faces much the same challenge as other forms of asset management: the fact that costs are rising faster than revenue. The consequent squeeze on profitability is encouraging many wealth managers to explore how technology can help restore a more comfortable expense ratio. But it is in the nature of wealth management to place service on at least an equal footing to efficiency. Which is why Wealth Wizards, a 12-year-old FCA-regulated technology provider to the industry, emphasises that the purpose of its systems is to not to cut costs but to make sure the provision of financial advice by experts is affordable. Indeed, the company holds that technology can make expert advice available to everyone, not just the wealthiest investors. Dominic Hobson, co-founder of Future of Finance, spoke to Nick Hall, head of advice at Wealth Wizards, about how the Turo software as a service platform can be used by wealth managers to free up time to spend profitably with clients at any level of income or wealth.

Questions being asked

1.       Financial advisers work in an industry in which costs are rising faster than revenues, squeezing margins. What do you see advisers doing to address the problem (e. g. automating manual processes, mergers, collaborative ventures, outsourcing, offshoring, hiring, training para-professionals etc.)?

2.       Do you find advisers complaining that they are inundated with work that could be performed by less qualified personnel?

3.       If so, what are the principal causes of that increased burden – legacy systems and processes, compliance, customer demands, or something else?

4.       Do financial advisers feel threatened by on-line wealth management platforms (such as Nutmeg and Wealthify)?

5.       Do financial advisers feel threatened by digitised asset classes (such as crypto-currencies, security tokens, asset-backed tokens and NFTs)? 

6.       In making their businesses more productive and efficient, do financial advisers suffer from the inertia of their clients?

7.       Have financial advisers achieved the optimal balance between fixed (ad valorem) and time-based fees?

8.       Are financial advisers frightened of losing control (of clients or work for clients)?

9.       Is financial advice affected yet by reputational systems (e. g. Trustpilot) or price comparison services (e. g. Go Compare) or simply the copying of the investment strategies of “influencers”?

10.   Financial advisers would expect Wealth Wizards to say that your machines will not disintermediate them from the supply of financial advice; that they will not replace people but work alongside them; that costs can be reduced to the point that previously uneconomic clients become economic; and that by automating “routine” work, the machines will free up time for more rewarding work (or “core competences”). These arguments are so familiar – from multiple industries facing automation – that a question naturally arises: why should financial advisers believe them- aren’t they just boilerplate ideas innovators use to reassure those about to be disintermediated?

11.   What are the “core competences” of financial advisers (e. g. selling, listening, talking, empathy, tax advice, or just a shoulder to lean on)?

12.   Why can’t machines help clients “realise their financial goals”?

13.   How compatible is automation with delivery of a bespoke product – is “mass customisation” a contradiction in terms or just a matter of throwing enough data and computer processing power at the challenge? 

14.   In an age when passive products are sweeping all before them, is there any evidence that clients value face-to-face advice enough to pay for it?

15.   Should financial advisers be concerned that automation/digitisation is a cumulative process (i. e. more and more tasks can be performed by machines)?

16.   Much of what Wealth Wizards is offering to do is automate data collection. Isn’t that something financial advisers ought to have been doing years ago?

17.   How ready are financial advisers to offer a “holistic” service (i. e. one that encompasses not just investment and tax advice but accounts, tax returns, mortgages, insurance, legal advice etc.)? 

18.   What has the Pandemic taught financial advisers about the value of face-to-face consultations?

19.   How flexible and adaptable to new technologies and ways of working have financial advisers proved to be?

20.   What is the new revenue opportunity that you see for financial advisers in digital technology?

21.   Should advisers be thinking in terms of using APIs more widely to create new “experiences” for their customers by using APIs to bring together services and data supplied by third parties? 

22.   Is it plausible to argue that, in future, systems engineers and data scientists will be more important to the quality of financial advice than financial advisers?

23.   Do the financial advisers you talk to believe their profession is at risk of a sudden disruption (most obviously by AI) or that the pace of change will be gradual or that steady innovation will defeat the possibility of disruption or that there is no risk of serious change at all?