Robo Advice

By Keith Barrett

The delivery of advice can be accelerated — and broadened to reach more people across Australia — through the use of digital platforms.

Chair Matt Kuperholz, Chief Data Scientist at PwC, talked about his company’s robo advice offering that has been in the US for many years, but highlighted the evolution of that interface to that of an avatar that can read human emotions at the speed of 100 times per second.

“We’re doing really exciting work with digital humans, avatars that respond emotionally to the micro-emotions that they see flitting across your face. We’re using digital advice to triage for a human adviser, and we’re performing some remediation of human advice using AI.”

He also introduced the concept of exAI, or explainable AI, in the context of the European Union’s General Data Protection Regulation (GDPR) regulation.

“GDPR, which is primarily around privacy and use of data, has Article 22 which says any EU citizen has the right to have the reasons for which a decision has been made that affects them, explained to them. What are our obligations going to be around explainable AI and the decisions we make, especially when they affect someone’s retirement? And what are the ethics around using computers for that sort of advice?”

Beyond the application of machines interacting with humans, there is also a wide range of other benefits to harnessing technology in the advice process.

This included the means to drive efficiencies in gathering data from multiple sources, and speeding up the delivery of advice to customers.

“As a business manager, where I think about robo advice is more behind the scenes support, and that automation of the advice process and the advice tools, and making those systemised to be able to give that dependable advice and manage that record keeping, and make the process more efficient,” Nerida Cole, Managing Director, Head of Advice at Dixon Advisory said.

“Because when you’re giving advice you can spend three hours on the phone trying to get the various information to bring together. At some point in the future being able to pull all that information together at the click of a button for the person you’re assisting would be incredibly effective.”

Another benefit of providing augmented or digital advice is to remove the risks associated with people making decisions on subject matter they don’t understand, and widening the reach of advice across the population.

“Most consumers are financially illiterate, so relying on them to make responsible and sensible decisions without any educational support is foolish,” said Hugh Morrow, CEO & Co-Founder, SuperEd.

“Yes, we absolutely do need to provide solutions for them and because of their economics they can’t afford traditional planning, so we need to provide lower cost channels.”

There are many people out there who need advice, and think that they don’t, and digital systems can help them with more common financial decisions that will help them towards their goals.

“Things like people leaving money in savings accounts, where we know that in order to reach their retirement goals, they need to invest that in ways, and need other people to help them,” Tara Richards, Head of Digital at QSuper said.

“From that perspective, robo advice has a role to play.”

For institutions that often retain customer for the a large part of their lives such as a superannuation fund, Richards said, there is a need to provide them with guidance on a wide range of subject matter and robo advice can help with that.

As the advice reaches beyond a certain level of complexity, should there be a form of regulation applied? Not according to ASIC.

“Licensees are responsible for the services that are provided under their licence, and you can outsource some of the compliance responsibilities around that, but you can’t outsource the responsibility,” said ASIC Commissioner John Price. 

He used another part of the financial services market to illustrate how far technology has already become part of today’s finance landscape.

“If you look at the equities market, well above 90 per cent of trading is done automatically, and regulation is sufficiently flexible to allow for that.

“Where bits of the law look like they’re not working we can, at our discretion, change our laws.”