Advisors offer added value that artificial intelligence does not possess. Is it enough to cope with the technological changes sweeping the industry? The key is to add more value.
“First, the industry needs to define what value is, where it is and how it is defined. Realize that we are facing an inevitable change and know why it is there,” said Michel Bergeron, partner at EY, who spoke at the 2017 Insurance and Investment Convention, which took place on Nov. 14 in Montreal.
He says that a few years ago there was a gap between what customers wanted and what the industry could offer them. Now new technologies are there to plug the gap.
“We do not only have a customer who wants something, we have the technology to meet his needs. We must not panic about this. It is essential not to stick with the status quo. We must not become the Blockbusters of this world against Netflix. The former did not consider their new competitor as a threat two years before closing their doors definitively,” he said.
It is important not to see technology as our enemy, but rather as our friend, said Bergeron. Since its existence and its advent are inevitable, it will be part of the landscape, and should be integrated into business development. Rather than reject it, advisors should focus on the elements that artificial intelligence cannot address.
Advisor of the future
Bergeron described what he believes would be the advisor of the future. He said the most important characteristic will be specialization.
Products tend to be more and more personalized. Advisors will have to know all the details about the various products offered on the market and not be afraid to go over them all, he said.
Future advisors will also have integrated digital platforms into their practice and will be on the cutting edge of trends. “Pay attention to the digital platforms that fintechs have and the ease with which they can be navigated. A company whose platform is older will display positive ratings that customers have given it. For their part, fintechs show all customer comments and are not afraid of an imperfect rating,”said Bergeron. He says consumers are looking for transparency and access to data to make their own interpretation.
Bergeron compares the digital revolution currently impacting the industry to other great revolutions that the world has experienced. He says that, as in the days of the industrial revolution, people have to change and adapt to new things, especially since the basis of this revolution is expanding rapidly. A new technology only needs 35 days from its launch to be adopted by 50 million users.
Adapting to change
“We once migrated from an essentially agricultural world to cities filled with factories. It was not easy for people at that time. The world is now richer and more efficient. We have been able to adapt and become better as a society because we focused on the added value of these changes. This is the same recipe that needs to be applied now,” he said.
By 2020, 50 billion objects will be connected, he said. “Everyone is connected and everyone has access to a wealth of data. Companies also have access to it. That makes it possible to have all sorts of new products,” said Bergeron.
And the advisor in all this? A survey of advisors by EY found that they consider market changes toward online sales and administrative tasks as the two elements that slow their growth the most. “In both cases, technology can help them, but can also be a threat,” said Bergeron.
All in all though, he says advisors do not have to be afraid of losing their place because of technology.
Financial technologies will never be 100 per cent adopted and consumers want to be served in different ways, he observes. Businesses cannot be in control of the channels with which consumers interact – the consumers want to decide. And one thing is certain, “digital advisors will also have problems,” he said.