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Are You Ready to Be a Bionic Financial Advisor?

What Is Bionic Advising?

A dynamic transition is underway in the world of wealth management. Tougher industry regulations combined with the rapid growth of digital technologies in financial services have paved the way for a new breed of financial advisor.

"Bionic" advisors retain the traditional face-to-face contact and relationship-building with clients, but add a new dimension. They are able to use state-of-the-art artificial intelligence (AI) tools and computer algorithms to provide clients with more consistently reliable investment guidance than would have been possible in the past. In insurance and banking, technology is used to automate decisions according to client-selected criteria, and the results are just as cost-effective and well-received.

In 2017, the industry saw a dramatic ramp-up in the offerings of "robo" or "bionic" financial advice services. The initial consumer response was promising, as 73 percent of surveyed consumers were happy with this kind of guidance. The bionic investing movement appears to be a natural progression from the work computers have been doing for decades with exchange traded funds (ETF) and retirement date funds. These types of funds have been affordable for years, because computers have replaced managers in re-balancing investments to maintain diversification as sectors and investments rose or fell.

What Skills Do Advisors Need to Work with AI?

Just as with ETFs, the bionic or robo component of financial advising is automated AI. Machines make these tasks more cost-effective and time-efficient, and can also work with larger baskets of investments much more easily than even the brightest financial advisors. So the investment and money management skills that are sought after in traditional money management relationships are not required by bionic advisors.

The bionic advisor is able to focus on truly understanding clients' investment objectives, risk tolerance and other variables that affect their portfolio management needs. In marketing, there is a shift to understanding the customer journey, which includes a customer's motivation to try new services and share their experiences socially. The bionic advisor can facilitate this experience by being transparent and honest about the potential risks and rewards of the products and services they offer.

In addition to relationship-building, the bionic advisor is able to explain how the information the client provides results in better financial decisions via technology. The AI becomes the conduit, providing needed information to both sides in order to forge a futuristic relationship between humans and the machines that serve them.

The discussions a bionic advisor has with clients are the foundation on which all of the AI capabilities are built. How well an advisor knows the client goes a long way toward predicting success for both the client and the firm.

Why Is This Trend Important, Today and Tomorrow?

According to a recent report by Accenture, seven in 10 consumers around the world say they would welcome robo-advisory services for their banking, insurance and retirement planning. Strong consumer demand already exists across the spectrum of financial advising, and we are only at the nascent phase of this trend. It is catching on quickly because the appeal of robo-advice platforms presents the prospect of faster and less expensive services. Twenty-six percent of consumers also believe machines are more impartial and analytical than humans.

According to Accenture, "Consumers are now open to robo-advice to help determine which bank account to open (71 percent), which insurance coverage to purchase (74 percent), and how to plan for retirement (68 percent). Nearly four out of five (78 percent) consumers said they would welcome robo-advice for traditional investing, where the technology first emerged."

Consumers still want some human interaction for advice about complex products and to respond to complaints, but the widespread willingness in 2019 to use bionic financial guidance suggests this trend will only gain traction as AI becomes even more pervasive.

Learn more about UTPB's online MBA with a Concentration in Finance program.


Financial Planning: Voices Human vs. Machine: The Rise of the Bionic Advisor

Bionic Advisory: What Is Bionic Advisory? The Rise of the Bionic Advisor

The Kinlin Company: Are "Bionic" Advisors the Future of Financial Advice?

Insurance Journal: Majority of Consumers Say They Would Welcome Robotic Agents in the Future

Accenture: Seven Out of 10 Consumers Globally Welcome Robo-Advice

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