Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 209

How robotics can deliver smart wealth advice

Over the last three years, there has been a significant shift towards the adoption of new and emerging technologies leading to a widening mix of advice, administration and investment practices among wealth managers.

In the face of competitive market pressures, constant regulatory change and escalating data volumes, it is critical for wealth management firms to leverage technology and the underlying data creatively to improve service quality, personalise customer experiences and create platforms for smart processing.

How mature are your digital operations capability?

Wealth managers need to define and firmly establish digital operations as a capability within their businesses. EY’s assessment framework of digital operations measures nine key dimensions that drive business benefits and outcomes.

One of the key drivers to the speed and adoption of digital operations is the maturity of the Robotic Automation solutions. There are two types of solutions in this marketplace: Unassisted Automation and Assisted Automation.

Both types of Robotic Automation can deliver significant time, processing and error reduction and service quality benefits to many areas of the wealth and asset management value chain.

For instance, Assisted Automation (often called Robotic Desktop Automation or RDA) could be used to augment workforce productivity. Unassisted Automation (often called Robotic Process Automation or RPA) could be used to reduce operational processing windows, operating costs and high-cost, low-value tasks.

Robotic Automation can also drive digital operations functionality, for example, by acting as a keystroke surveillance agent, enabling workforce intelligence and improved employee performance via data-driven coaching. Or it could be used as an engine to work alongside or supplement front-end robo-advice platform offerings.

How can software robotics provide assisted advice with front-end robo-advice?

Keeping a customer’s best interests at the centre of an advice model is essential to wealth management success. Risk management in advice is also under increasing scrutiny from regulators. In the superannuation space for example, this message was highlighted recently by the Productivity Commission.

ASIC also published a review earlier this year, as part of its Wealth Management Project, identifying areas for improvement in how advisers are overseen within large organisations:

  • “Failure to notify ASIC about serious non-compliance concerns regarding adviser conduct
  • Significant delays between the institution first becoming aware of the misconduct and reporting it to ASIC
  • Inadequate background and reference-checking processes, and
  • Inadequate audit processes to assess whether the advice complied with the ‘best interest’ duty and other obligations”.

Robotic Automation can help regardless of whether a robo-advice platform already exists within the organisation. One example of this is the data analysis and data crunching work used to prepare a Statement of Advice with a risk management overlay. Robotic Automation solutions can automate a number of these steps, such as dealing with data points, drawing information out of multiple legacy systems, stitching it together and providing an end to end audit trail.

EY’s recent report, Robotics and its role in the future of work, found that the gains from automation can be considerable, but that even more is possible when robotics and digital are brought together. Robotic Automation can tap into shadow or legacy IT systems where it may otherwise be hard to create a new integration point, to feed a greater number of services or data points into the robo-advice channel.

What about investments and administration?

Non-indexed and unstructured investment instructions from different sources can lead to inefficiencies, errors and service quality reductions as data is reassembled into a variety of models to understand exposures, risks, performance and attribution.

Many organisations face the challenge of managing critical information across a mix of core and secondary systems, requiring highly-skilled staff to undertake repetitive activities. Robotic Process Automation could be used to operate around the clock, managing data collection, augmentation, and analytics and reporting. This model would result in only exceptions needing to be escalated to skilled staff as required.

It’s an especially good candidate where a set of steps occur each every day which is highly repetitive, rules-based, digitally triggered and based on structured data.

Where will your robotics journey take you?

Driving a Robotic Automation agenda into advice, administration and investments functions can help improve costs and significantly relieve pricing and margin pressure. The benefits, such as moving towards 100% paperless, can also be greatly accelerated through the use of a range of other capture and workflow tools.

Competing in the digital age means doing things differently. Wealth managers need to be laser-focused on data management and analytical strategies, using a data-driven approach to derive key outcomes and measure the maturity of their digital operations capabilities.

 

Jason McLean is the EY Oceania Wealth and Asset Management Advisory leader. Andy Gillard is the EY Asia-Pacific Digital Operations Leader. The views expressed in this article are the views of the author, not Ernst & Young. The article provides general information, does not constitute advice and should not be relied on as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Liability limited by a scheme approved under Professional Standards Legislation.

 

RELATED ARTICLES

1 January is a moment of truth for the wealth industry

FoFA, the Failure of Financial Advice, Take 2

Has FoFA become the Failure of Financial Advice?

banner

Most viewed in recent weeks

A tonic for turbulent times: my nine tips for investing

Investing is often portrayed as unapproachably complex. Can it be distilled into nine tips? An economist with 35 years of experience through numerous market cycles and events has given it a shot.

Rival standard for savings and incomes in retirement

A new standard argues the majority of Australians will never achieve the ASFA 'comfortable' level of retirement savings and it amounts to 'fearmongering' by vested interests. If comfortable is aspirational, so be it.

Dalio v Marks is common sense v uncommon sense

Billionaire fund manager standoff: Ray Dalio thinks investing is common sense and markets are simple, while Howard Marks says complex and convoluted 'second-level' thinking is needed for superior returns.

Welcome to Firstlinks Edition 467

Fund manager reports for last financial year are drifting into client mailboxes, and many of the results are disappointing. With some funds giving back their 2021 gains, why did they not reduce their exposure to hot stocks when faced with rising inflation and rates?

  • 21 July 2022

Welcome to Firstlinks Edition 466 with weekend update

Heard the word, cakeism? As in, 'having your cake and eating it too'. The Reserve Bank wants to simultaneously fight inflation by taking away spending power, while not driving the economy into a recession. If you want to help, stop buying stuff.

  • 14 July 2022

Welcome to Firstlinks Edition 465 with weekend update

Many thanks for the thousands of revealing comments in our survey on retirement experiences. We discuss the full results. And with the ASX200 down 10%, the US S&P500 off 20% and bond prices tanking, each investor faces the new financial year deciding whether to sit, sell or invest more.

  • 7 July 2022

Latest Updates

Economy

The paradox of investment cycles

Now we're captivated by inflation and higher rates but only a year ago, investors were certain of the supremacy of US companies, the benign nature of inflation and the remoteness of tighter monetary policy.

Shares

Reporting Season will show cost control and pricing power

Companies have been slow to update guidance and we have yet to see the impact of inflation expectations in earnings and outlooks. Companies need to insulate costs from inflation while enjoying an uptick in revenue.

Shares

The early signals for August company earnings

Weaker share prices may have already discounted some bad news, but cost inflation is creating wide divergences inside and across sectors. Early results show some companies are strong enough to resist sector falls.

Property

The compelling 20-year flight of SYD into private hands

In 2002, the share price of the company that became Sydney Airport (SYD) hit 80 cents from the $2 IPO price. After 20 years of astute investment driving revenue increases, it sold to private hands for $8.75 in 2022.

Investment strategies

Ethical investing responding to some short-term challenges

There are significant differences in the sector weightings of an ethical fund versus an index, and while this has caused some short-term headwinds recently, the tailwinds are expected to blow over the long term.

Investment strategies

If you are new to investing, avoid these 10 common mistakes

Many new investors make common mistakes while learning about markets. Losses are inevitable. Newbies should read more and develop a long-term focus while avoiding big mistakes and not aiming to be brilliant.

Investment strategies

RMBS today: rising rate-linked income with capital preservation

Lenders use Residential Mortgage-Backed Securities to finance mortgages and RMBS are available to retail investors through fund structures. They come with many layers of protection beyond movements in house prices. 

Sponsors

Alliances

© 2022 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.