Practice Management

Automation can up efficiency, but traps exist

A panel of financial services industry executives has suggested automation in the form of robo-advice can help accountants service smaller clients more efficiently, but recognition of the pitfalls associated with automation need to be considered before its implementation.

Panellist and Stockspot founder Chris Brycki told the Accounting Business Expo session hosted by Class in Sydney yesterday that robo-advice could help manage the servicing of smaller clients from both a cost and time management perspective.

“Cost is definitely the first opportunity for automation and robo-advice, and certainly for the first two years our service was up and running the majority of our clients signing up were clients who wouldn’t traditionally see a financial adviser because either they didn’t want to or they wouldn’t have enough assets to actually justify seeing a person,” Brycki revealed.

“We were actually able to provide a personal level of service and allowed clients to do it in their own time frame, to do it when they wanted to do it, whether it be on the train or at home.

“That’s where we saw the biggest opportunity to service smaller clients and that allowed us to service clients and only charge quite a small amount.”

However, fellow panellist Commonwealth Bank of Australia advice strategy and projects general manager Rick Di Cristoforo warned accountants to be aware of some critical issues before going down the automation path with the first one of those elements being the use of models.

“If you get it wrong, you get it wrong systematically,” Di Cristoforo said.

He cited the uniformity that could result from automation as a second item accountants should consider before implementing automation in the context of the best interest duty financial advisers are now legally bound by.

“There is an implicit requirement under the best interest duty that as soon as you provide personal advice you have to look at a client’s personal circumstances,” he said.

“With the efficiency benefits from automation you have to be careful you don’t cross the line and start cookie cutting. As you start cookie cutting you’re going to get sorted out by the regulator.”

The premise of providing advice at a low cost was the final factor he named as a potential trap with automated advice.

He said the basis of automation is the ability to repeat an action over and over again, with this cycle allowing costs to be controlled.

However, if the cycle of repetition did not suit a client’s needs, a necessary change in the process could end up driving up transaction costs, he noted.

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