Can InsurTech Replace Financial Advisors?
The article “The Incumbent vs the Disruptor: How Much Has Changed?” published in the Asian Insurance Review dated September 2017 was an interesting read. It explores the idea of whether InsurTechs will replace face to face selling.
Based on the current offerings by InsurTech platforms in the insurance industry, Mr Poh, a Senior Financial Services Director with a financial advisory firm, shared that the degree of disruption is nominal. Most of the platforms offer little or no cost savings. He goes on to say that –
“Even those with savings, the fact remains that good financial planning comes from experience and advice from practitioners …. I believe there will always remain a class of consumers that will prefer to leave it to the professionals than do everything themselves.”
Unless one is willing to spend time and effort to self-educate and self-service, sound financial planning is not a DIY activity.
Jobs that require high level of social intelligence (like nurses, lawyers), high creativity level (like architects, interior designers) and high level of perception and manipulation of tasks (like doctors, dentists) have a low probability of being replaced.
Financial planners fall into the high social intelligence category and also overlap a little with the high creativity level category.
Jobs in the high social intelligence category involve a good deal of persuasion, negotiation, hand holding, care and empathy. Jobs requiring low social intelligence are almost all gone. It is interesting to observe that, increasingly, tied insurance agents also fear being ‘left behind’ and replaced by InsurTech if they do not upgrade to a comprehensive financial planning practice model.
Services delivered by a comprehensive FInancial Planner that cannot be automated:
- Personalised Planning
There is no ‘one size fits all’ in financial planning. Each financial plan that is drawn up is bespoke and customised. We recognise that each client is unique. Some may have special needs and even sophisticated requirements. How would a requirement affect the other areas of financial planning? Can a robot assess the financial situation of a client holistically and give appropriate advice?
- Consultative Process
The financial planning process is a highly interactive and consultative one. When you visit a doctor, the doctor will ask you questions, examine you and give his diagnosis. SImilarly, the financial planner has to conduct a thorough fact find with you before suggesting a suitable action plan.
- Coaching Oriented
Coaching is almost second nature in the work of a holistic financial planner. It involves an understanding of psychology and behavioural economics. My clients appreciate the fact that I am there for them, providing guidance when they need to make financial decisions that will have a significant impact in their lives. Implementation of plans can be automated but not the thought process that helped make those decisions.
A good financial planner educates his or her clients. 11 years on and I am still passionate about sharing knowledge on financial concepts. My aim is always to make the complicated and complex simple for my clients to understand. They have come to know the financial planning principles that I adhere to and that my answers to their questions will always be backed by sound facts and rationale.
A computer can drive the car or answer generic questions. But it can not have a human conversation with you. If you are currently not under the care of a comprehensive financial planner, let’s have a chat!