[FSC Conference] The rise of the machines; Robo like a toddler

Fintech and robo advice are a theme in our coverage of day three of the FSC conference; plus we report on Kiwi's financial resilience.

Friday, October 16th 2020, 7:35AM

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FSC finds New Zealanders’ financial resilience shines through tough times

The latest research from the FSC shows that despite global challenges, New Zealand financial resilience remains strong.

By Daniel Smith

The latest round from the FSC’s Financial Resilience Index shows that despite the last six months being one of the most challenging periods in recent history, New Zealanders have remained remarkably resilient and confident when it comes to financial matters.

The Financial Resilience Index is a major tracking survey of New Zealanders’ views on five key financial resilience indicators: financial confidence, literacy and preparedness, job security and wellbeing.

The final survey in the three-part series was undertaken between August 6 and 7, and compares to earlier data collected in March and April. It was launched on Thursday morning at the FSC’s Annual Conference.

“The responses in early August show that after initial uncertainty Kiwis remained resilient throughout this unprecedented period, from the introduction of Covid-19, to living in lockdown, right through to the return to alert level one,” says Richard Klipin, FSC chief executive.

“Despite these dramatic changes, New Zealanders continued to have incredible financial confidence, with around 72% of respondents still feeling reasonably, very or extremely confident when it came to their finances.

“The Financial Resilience Index has shown us that while the health of New Zealanders’ resilience remains intact, there is an underlying anxiety about money issues, that is in turn affecting our wellbeing.

“Financial resilience in isolation is not of much use – it needs to go hand-in-hand with more general wellbeing and collectively we can do better in recognising this.

“We hope that this research will help build a better understanding of these and how New Zealanders have felt during this time and how we can collectively work to help New Zealanders continue to improve their financial resilience and overall wellbeing in the future,” concluded Klipin.

The Financial Resilience Index can be found here.

The rise of the machines

Industry leaders on both sides of the robo-advice debate weigh in on the future of non-human financial advice.

By Daniel Smith

If regulation changes weren’t enough to worry about, financial advisers have another problem on the horizon, robots. Developments in AI have led many in the industry to consider the future of robo-advice in financial services. At this point the New Zealand client base overwhelmingly supports letting a human handle their money, but will that always be the case?

Leading the vanguard on the side of the machines was Gary Green, managing director of Quanton said that “machines can democratize access to advice.” Green believes that there are many roadblocks to New Zealanders accessing financial services and wealth and education are only some of them. “There are a finite number of advisers. If you are trying to grow the market, then technology can step in.”

Supporting the pro-robo cause was Kristen Lunman, co-founder and general of Hatch, who said that while access to advice was a key issue in New Zealand, “technology is the only thing that can remove those barriers on a mass scale.” Lunman feels that the trust in robo-advice will grow over time and points to the fledgling stages of Uber and AirBNB as examples, “When those companies started people were like, ‘what, I am going to go into someone’s car or house?’ now they are commonplace. This is an example of trust in new technology being earned”.

Fighting for the human element was Trisha Edmonds, head of advisory distribution at ANZ, who said that “the question isn’t whether people need advice but whether robo-advice offers the right kind of guidance.” Edmonds pointed out that people are different and require different nuances in both their portfolios and their customer experience. “Advisers can bridge the gap between client and financial understanding, but they also can become life and wellbeing coaches, robots cannot do this.”

Discussing whether the current regulations were helping or hindering a brighter future for robo-advice, Noah Schiltknecht, founder of Makao Investments, said that “regulating robo-advice but letting people make investment decisions with no advice may not be the best way to go.”

A robust and thought provoking debate for competing visions of the future.

The role of tech in shaping the wealth of the next generation

Industry leaders discuss the exciting future of Financial Technology and AI investment tools in the FSC conference.

by Daniel Smith

There are few topics in financial services that have caused as much excitement and debate as the incoming impact of financial technology.

“AI is like a toddler. It can do a few things, it can also make a mess. But as we school it, it will become more and more useful,” Stephen Upton, COO of Kernel Wealth said.

He says that the future of financial AI depends on companies having good enough data to train it.

George Carter, managing director of Nikko Asset Management believes that “we can meet the needs of a lot of investors with fairly basic technology”. He believes that we shouldn’t lose sight that “just because we can’t solve all the problems related to AI, it doesn’t mean we can’t solve some of them.”

Carter says that a lot of the current technological gaps in financial AI technology can be filled by adviser knowledge. “There is a lot to gain in integration between adviser expertise and the helpful tools of rudimentary AI.”

Barry Coates, founder of Mindful Money says that financial technology needs to catch up with the new wave of modern investors. “Traditionally there are two dimensions for investment; risk and return. We have seen FinTech catch up to these rather quickly. But now for many advisers and investors there is a third dimension, impact on people and the planet.”

Coates says that Fintech needs to accommodate for this aspect of the market if it is to play a role in the future of advice. “This is vital information. If AI is illuminating data rather than hiding it then we can use it with much more trust.”

Rachel Strevens, founder of Invsta, says that a lot of what is being talked about as the future of FinTech “companies are already working hard to bring to market.” What Strevens is worried about is the upcoming regulation changes don’t “stifle the industry innovation that needs to happen”.

Strevens says that there are a lot of potentials in the FinTech space but the biggest opportunity is “in lower to middle income sections of society who have traditionally missed out on getting financial advice. We need to make sure that the technology is reaching these people and that the advice is of a good quality.”

Tags: FSC