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View from Standard Life: Defining advice – advice vs. activity and execution

David Tiller

Well, the advice gap is now officially acknowledged, but, is FAMR correct that technology is the answer? Of course it is. The advance of technology is inevitable and automation brings efficiencies. Denying this is akin to trying to push water uphill – ultimately futile.

The term ‘robo-advice’ is highly misleading as it implies human advisers will be replaced by technology. It’s about value. Technology is not a threat to the things advisers are good at. However, we must all accept that technology will play a greater role in areas where, quite frankly, we humans do not excel. We should all be glad of this and accept humans and technology can be synonymous.

I am a huge admirer of the UK’s advisory businesses. Being an advice business is not easy. But advisers advise… and there is a shortage of advice in the UK, so why do so many businesses get bogged down in administration, running investment processes or with overly complex business models demanding they deal with multiple counterparties without proper integration?

Things could be very different.

If every adviser truly believed that the intellectual property behind the advice given is where the value is, rather than the execution of activities, then far more aspects of businesses could be automated or outsourced.

If automation and outsourcing give you shivers, maybe you’re placing too much value on the activities being executed in your business and not enough on the advice itself. Truly believing in the value of advice creates a need for different conversations with clients; down weighting activity and transactions in favour of diagnosis, insights and reassurance.

We are a long way off from programmes being able to come close to the value added through true advice. However, supporting the transactional execution of activities with simple decision trees is imminent.

For some people with simple requirements, this may be enough. However, the advice gap cannot be closed by online self-service alone. The UK needs access to advisers and I believe that they can get this access if advisers embrace the same technologies that some commentators would have them be fearful of.

Advice cannot be confused with activity or execution.

David Tiller is Head of Adviser & Wealth Propositions at Standard Life

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