Not long ago, the term “robo advisors” created waves in the financial universe and many CFOs feared that computer algorithms would soon replace human advisors. In due course however, it became clear that a computer alone cannot address all questions related to investing, more so, because they lack the emotional aspects involved in the entire financial journey. Enter ‘bionic advisors’ who, according to finance experts are a combination of human and machine that can provide the best of both worlds – much like a cobot.
Enter Bionic Advisors
In a recent conversation with CXOToday, George Mitra, CEO and Co-founder of Fintso, an AI-based wealth-tech platform catering to independent financial advisors and their investors, explains the importance of artificial intelligence (AI) and machine learning (ML) for financial advisories and how bionic advisors are working at the convergence of digital technology and human experience to bring immense potential in the world of investing and advisory.
According to Mitra, a human advisor that uses technology to the fullest is a bionic advisor. They employ the expertise of the advisor and make smart use of technology to enhance client relationships. Bionic advisors interact with their clients via a portal, use algorithm to test out suggested strategies and let technology do the routine and mundane tasks like report generation. Technology allows them to focus on strategic decisions and achieve better results, yet there’s also this “human touch”.
Drawing a sharp contrast with robo-advisors, he says, “When Robo-advisors are used, they often lack the judgement and empathy which can only be provided by human advisor. That’s because, when it comes to financial planning and strategy, it takes more than a set of algorithms to come up with the best solution. Bionic advisors consider their clients personal goals before charting out the optimal course, which a Robo Advisor cannot. They essentially provide the best of both worlds – the trust and empathy of a person the client knows and the efficiency and advances of technology.”
Mitra sees this shift towards bionic advisory as a stepping stone in financial and wealth management industry with the unique challenges the pandemic has brought to the wealth management space.
“Advisory and Financial professional are facing a number of challenges. The top being the absence or limitations of meeting people, which in turn meant difficulty in acquiring new clients, maintaining existing relationships, and finding ways to leverage digital transformation that were being adopted by the clients,” says the CEO of the Mumbai-based firm.
Added to this was the volatility and uncertainty, of not only the markets, but on the client’s cash flows itself. Giving the example of his own company, he explains, “What we’re seeing at Fintso is that clients want assurance and assistance more than ever. Withdrawing of existing policies, lapses in payment of premium amounts, the inclination of clients to sway with every moment in the market makes the job of their advisors more difficult and challenging. Some clients even have unrealistic expectations when it comes to finances. Getting them to refocus on plans, and move away from emotion led decisions, is the key to keeping the client’s finances and their relationship on track.”
Digital is the future
Not surprisingly, client acquisition is also increasingly tough. Due to the financial crunch, most people are looking at freezing, reducing or even cancelling their existing savings plans. This, however, also is an opportunity, notes Mitra, who believes, those who can spend time on digital outreach and stay up-to-date with technological advancements can differentiate themselves and grow their business.
According to Mitra, “In the finance industry, including banks, trading and fintech firms are rapidly deploying AI/ML to automate time-consuming and mundane processes. Say, ML makes it much easier to analyse historical data and predict outcomes better than traditional methods and are thus helpful in minimizing risk. Intelligent automation is another area where AI solutions help, by enabling MFDs deal with repetitive tasks, and paperwork efficiently. These technologies also offer a far more streamlined and personalized customer experience.”
While cost still remains a barrier for companies to leverage AI-based solutions that can boost bionic advisories, the primary reason that such technology has been limited to large institutions offering the same to their select clients, Mitra believes, with the advent of new-age platforms, this type of solutions are now becoming available to independent advisers, and through them, to their clients. Fintso, for example, is equipping advisors by leveraging cost-efficient and easy-to-use SaaS-based AI platforms to become Bionic Advisors.
“The need of the hour is for a financial advisor is to re-imagine his/her role in this increasingly digital environment and to present themselves as CFOs for their clients – visually. S/he should be someone who is not just there as a one-time “sales” person, but someone who looks at all aspects that are linked to their financial well being,” he concludes.