Login
ISCOVER
It's remarkable to think that automated advisory systems are a reality. More amazing perhaps for some industry veterans is that consumers are warming to them. Quite simply, automation is something none of us can ignore.
If you're not familiar with the concept, automated advisory services manage investment portfolios using a complex system of algorithms. The client provides key data like risk tolerance, personal goals and so on, and the algorithm takes care of the rest, automatically rebalancing portfolios in line with the parameters provided. Needless to say, it's a far cheaper option for consumers than face-to-face advice.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
It may be easy to scoff at such services ever taking hold. But it's dangerous to do so. Younger generations of Australians, who represent the next wave of home buyers, upgraders, investors and wealth builders, have grown up in a digital world where automation and innovation aren't just familiar, they are expected and warmly embraced.
Disregarding the possibility that broking may become automated is short-sighted. The key is to prepare for it now.
A valuable starting point is to consider what you can do that an algorithm can't. The answer is 'plenty'.
As a broker, you have the capacity to take on the role of coach and partner to your clients. A home loan is a key product in our lives, and it makes sense to promote your expertise by encouraging annual mortgage health checks and supporting the decisions your customers make.
Gaining an intimate understanding of your client base is something an algorithm can never achieve. Segmenting your market base in a linear, chronological way can help to determine who your future customers will be (probably the current 18-25 year olds), then build your business around meeting their needs.
More importantly, accept that different customers need differing levels of advice. Some will need full-scope traditional support. Others will be comfortable using online tools and adopting a do-it-yourself approach, though with some validation of their decisions. That's where you come in. Figure out how you can offer each of your customers value for money. For instance, could you give back some of your commission to those who are doing a large chunk of the work themselves?
Or, if a customer tells you what they want to do but seeks your opinion on their planned strategy, it may pay to move to a fee-for-service model rather than full commission. Customers who don't see value for money may opt for the risk of taking an entirely DIY approach rather than accepting (and paying for) advice they don't fully need. Get this wrong in the early stages and you've potentially lost a customer for life.
The main point is that algorithms provide answers and automated responses. They don't build relationships. They don't inspire. They don't act as mentors. And they don't anticipate future needs.
What all service providers – brokers included, should be thinking about, is how we can meet our customers' needs by providing an ongoing health check that they can benefit from year after year. This builds the foundations of an enduring relationship with your customers and sets the foundations for you to grow a sustainable business in the longer term.
