Should Financial and Property Planners Fear Replacement by Robo-Advisors?
By Sheha Sidek, Concept Folks
In an article published on April 2016, the World Economic Forum (WEF) has declared that banks may be on the edge of facing an “Uber moment.”[1] Over 30% of bank employees, according to WEF, may be replaced by technology by 2025, and private investment in Financial Technology (Fintech) has rocketed from $1.8 billion in 2010 to $19 billion by 2015.
Similarly, developments in Property Technology (Proptech)[2] by companies such as “LessPercent.com” in Florida now allow sellers to get online to compare offers from real estate agents bidding for their listing. This service is provided free of charge. Agents are thus compelled to adjust their commissions to remain competitive – an act that is unprecedented before the coming of these technological advancements.
It is clear, therefore, that a digital revolution has taken root in these two sectors. This is changing the way consumers interact with financial and real estate representatives.
Given the massive financial backings into these online platforms, as well as the increasing public scrutiny on rogue financial and property planners, where do traditional Financial and Real Estate Representatives stand in the midst of these technological disruptions? Will consumers replace human experiences with mathematical algorithms to conduct their daily transactions?
Fintech and Proptech are here to stay
Despite the spread of unease amongst traditional planners, both Fintech and Proptech have been deeply embedded into the sales discourse and this is not about to go away.
Developments in online platforms have opened up a tidal wave of accessible information where customers can pick and choose the best, the cheapest and the most appropriate product on their own. It saves them time, allows them to make informed decisions, and insurance or property companies save money by not having to pay a fee to their planners.
The creation of transparent business transactions empowers these consumers, and they are more inclined towards bypassing agents altogether when engaging in micro-transactions such as looking to rent an apartment or buying travel or accident insurance.
Robo-Advisors can fill up gaps in services
Customers may also feel that they are not receiving the right information from their brokers and genuinely fear that they can be taken advantage of. In a recent article from Business Insider Singapore[3], it is reported over 16 million people in the UK alone may feel “trapped in a financial advice gap” where the information they need is not affordable or available.
A research report by Cerulli Associates also discovered that smaller investors do not get the advice they need, and only 8% of financial planners even target these market.
As such, large investment companies actively seek to develop these platforms to serve their client’s need directly. Automation options are available to clients of lower net worth, and they are able to benefit from this service in the absence of a planner who cannot service them due to regulations or whose customer cannot afford their fees.
Enjoy the best of both worlds ( could be a shorter subheading)
That said, the primary objective of both automated online planners as well as their human counterparts is to provide a service for customers. A recent statement issued by MAS Chief Fintech Officer, Sopnendu Mohanty, highlights that “Fintech firms are not here to challenge you. They are here to partner you”.[4]
As such technology is just a tool that creates better products and services for customers, and it is not meant to replace traditional planners.
Still, this serves as a warning for complacent planners with lax servicing standards. According to Ong Whee Teck, a partner of Technology Consulting at PricewaterhouseCoopers, he says, “The days are here to collaborate, otherwise fintech is here to eat your lunch.”
“There’s still dissent among banks internally and the reluctance comes from the fear of investing too much in an unclear strategy,” he continues. “The key is not about assuaging fears, but showing them the art of possibility. Businesses should feel the need to be digital and (understand) how Application Programming Interfaces (API) will take the journey forward.
Similarly in Proptech, Singaporean Company OrangeTee[5] has launched a property agent “rating platform” so customers are able to get access to the best services. The website serves to showcase the best property agent in their portfolio. Reviews from real customers are published on the agent’s profile pages and a detailed description of their experiences and accomplishments is also collated on the platform.
The company’s Managing Director, Steven Tan, explained in a Channel News Asia report, saying, “ The rising threat of technology upending the local property sector is a reason why the home-grown company created the new platform, which also allows users to do the usual search for property listings based on districts and past transactions.”
These technological “disruptions” may have interfered with the traditional sales process, but it provides, according to Mr Tan, a “self-regulatory mechanism which we believe will raise the services standards among our agents.”
Conclusion
Till then, the presence of both Fintech and Proptech is on an upward trajectory, and this trend is here to stay. Financial planners may find their market being infiltrated by automation from algorithms, and property planners may find themselves edged out of the market when showcased on highly competitive online platforms. Yet, even they stand to benefit once they use these resources effectively (and ethically) in their favour, earning the chance to remain relevant in current times.
At the heart of these technological “upheavals” it is the customer who benefits at the end of the day, and this leaves a profound, positive and permanent change in the way professional advice is administered.
[1] https://www.weforum.org/agenda/2016/04/what-does-the-rise-of-fintech-mean-for-banking/
[2] http://www.propertyportalwatch.com/property-tech-platform-less-percent-moves-florida/
[3] http://www.businessinsider.sg/fca-robo-advisors-could-fill-financial-advice-gap-2016-3/?r=UK&IR=T#1UIqTe4y80BEtL6Z.97
[4] http://www.channelnewsasia.com/news/business/singapore/banks-and-fintech-firms/2645080.html
[5] http://www.channelnewsasia.com/news/business/singapore/new-property-agent-rating/2779594.html
Similarly, developments in Property Technology (Proptech)[2] by companies such as “LessPercent.com” in Florida now allow sellers to get online to compare offers from real estate agents bidding for their listing. This service is provided free of charge. Agents are thus compelled to adjust their commissions to remain competitive – an act that is unprecedented before the coming of these technological advancements.
It is clear, therefore, that a digital revolution has taken root in these two sectors. This is changing the way consumers interact with financial and real estate representatives.
Given the massive financial backings into these online platforms, as well as the increasing public scrutiny on rogue financial and property planners, where do traditional Financial and Real Estate Representatives stand in the midst of these technological disruptions? Will consumers replace human experiences with mathematical algorithms to conduct their daily transactions?
Fintech and Proptech are here to stay
Despite the spread of unease amongst traditional planners, both Fintech and Proptech have been deeply embedded into the sales discourse and this is not about to go away.
Developments in online platforms have opened up a tidal wave of accessible information where customers can pick and choose the best, the cheapest and the most appropriate product on their own. It saves them time, allows them to make informed decisions, and insurance or property companies save money by not having to pay a fee to their planners.
The creation of transparent business transactions empowers these consumers, and they are more inclined towards bypassing agents altogether when engaging in micro-transactions such as looking to rent an apartment or buying travel or accident insurance.
Robo-Advisors can fill up gaps in services
Customers may also feel that they are not receiving the right information from their brokers and genuinely fear that they can be taken advantage of. In a recent article from Business Insider Singapore[3], it is reported over 16 million people in the UK alone may feel “trapped in a financial advice gap” where the information they need is not affordable or available.
A research report by Cerulli Associates also discovered that smaller investors do not get the advice they need, and only 8% of financial planners even target these market.
As such, large investment companies actively seek to develop these platforms to serve their client’s need directly. Automation options are available to clients of lower net worth, and they are able to benefit from this service in the absence of a planner who cannot service them due to regulations or whose customer cannot afford their fees.
Enjoy the best of both worlds ( could be a shorter subheading)
That said, the primary objective of both automated online planners as well as their human counterparts is to provide a service for customers. A recent statement issued by MAS Chief Fintech Officer, Sopnendu Mohanty, highlights that “Fintech firms are not here to challenge you. They are here to partner you”.[4]
As such technology is just a tool that creates better products and services for customers, and it is not meant to replace traditional planners.
Still, this serves as a warning for complacent planners with lax servicing standards. According to Ong Whee Teck, a partner of Technology Consulting at PricewaterhouseCoopers, he says, “The days are here to collaborate, otherwise fintech is here to eat your lunch.”
“There’s still dissent among banks internally and the reluctance comes from the fear of investing too much in an unclear strategy,” he continues. “The key is not about assuaging fears, but showing them the art of possibility. Businesses should feel the need to be digital and (understand) how Application Programming Interfaces (API) will take the journey forward.
Similarly in Proptech, Singaporean Company OrangeTee[5] has launched a property agent “rating platform” so customers are able to get access to the best services. The website serves to showcase the best property agent in their portfolio. Reviews from real customers are published on the agent’s profile pages and a detailed description of their experiences and accomplishments is also collated on the platform.
The company’s Managing Director, Steven Tan, explained in a Channel News Asia report, saying, “ The rising threat of technology upending the local property sector is a reason why the home-grown company created the new platform, which also allows users to do the usual search for property listings based on districts and past transactions.”
These technological “disruptions” may have interfered with the traditional sales process, but it provides, according to Mr Tan, a “self-regulatory mechanism which we believe will raise the services standards among our agents.”
Conclusion
Till then, the presence of both Fintech and Proptech is on an upward trajectory, and this trend is here to stay. Financial planners may find their market being infiltrated by automation from algorithms, and property planners may find themselves edged out of the market when showcased on highly competitive online platforms. Yet, even they stand to benefit once they use these resources effectively (and ethically) in their favour, earning the chance to remain relevant in current times.
At the heart of these technological “upheavals” it is the customer who benefits at the end of the day, and this leaves a profound, positive and permanent change in the way professional advice is administered.
[1] https://www.weforum.org/agenda/2016/04/what-does-the-rise-of-fintech-mean-for-banking/
[2] http://www.propertyportalwatch.com/property-tech-platform-less-percent-moves-florida/
[3] http://www.businessinsider.sg/fca-robo-advisors-could-fill-financial-advice-gap-2016-3/?r=UK&IR=T#1UIqTe4y80BEtL6Z.97
[4] http://www.channelnewsasia.com/news/business/singapore/banks-and-fintech-firms/2645080.html
[5] http://www.channelnewsasia.com/news/business/singapore/new-property-agent-rating/2779594.html