The role of technology

How best to digitally engage with investors.

Role Of Technology
Mickey Morrissey
Published: 13 Nov 2018 Updated: 04 Aug 2022

Mickey Morrissey: Let’s move onto the role of technology. Angus, I think we’ll start with you here, because Defaqto is very much a technology-driven company. What tools can you now make available to your investors?

Angus Robb: We have a system that is increasingly becoming a start-to-finish advice program, from fact finding to risk profiling to product selection. It doesn’t have a transactional element yet, but I suspect that will come in time. Technology is a major selling point for us. And I think that will continue.

Tony Wassell: I think we’re looking at a two-tier system, and technology may be the perfect solution for that setup. As a firm, we’ll continue to focus on people with more than half a million who warrant the advice and have the money to pay for it. They’re cash rich and time poor.

Technological advice, however, will be aimed at a very different audience. When Amazon and Google kick off the robo-advice market in the coming five-plus years, they’ll sweep up. But it won’t be clients with three or four million in assets, because they want to pay for face-to-face advice. What roboadvice will do is fill a gap that needs to be filled. People can say, ‘I have this much money to invest and I want to take this much risk’. They do run the risk that as they make too much money they do need more in-depth advice. That’s where we come in.

Dave Field: What technology can also do is drive down costs. Things like paperless application are changing the way people do business. Everything is online now, so that’s where you need to deliver. We have absolutely no paper on our offshore platform — it’s all delivered online. At one time, in the offshore space, it could take three to four weeks to send a piece of paper around the world getting all the relevant signatures to make a trade. When you decide to make a trade, you want it to happen there and then. With us, this now takes three to four seconds.

Mickey Morrissey: We have to consider the next generation, which will be far more advanced. They’ll be moving money while drinking their coffee in Costa. They’re going to demand a lot more from technology.

Nick Britton: Look at what’s happening in the banking industry with Monzo. There are a lot of 20-somethings walking around with these pink debit cards. It’s about more than just not using cash anymore, it’s about budgeting for food and clothes. It’s far more sophisticated than anything your high-street bank offers. If that’s happening in the banking industry, which is very conservative, then it’s only a matter of time before it comes to our industry.

Dave Field: I think the point about robo-advice is — if it’s done properly, there’s a gap there that needs to be filled. Because the cost of face-to-face advice is just too great for most people. But no-one seems to know what roboadvice is. If it just does the same thing as face-to-face advice, it’s going to have the same servicing costs. And people still won’t be able to afford it. What you want is self-service advice that does a certain job for a certain segment of the market at a certain cost, and face-to face advisers that do a different job for a different section of the market. But we aren’t there yet; it still feels like there’s an element of confusion around what robo-advice can be.

Angus Robb: Robo-advice is unlikely to help with more complex issues. But it can be a very simple service for a certain type of client. And undoubtedly, it will have a role to play.

Tony Wassell: It’s a little like when Tesco, M&S and Sainsburys all decided to go into banking with mortgages and loans. It brought banking more into the mainstream, because they all have a huge customer base. Amazon, Google and their ilk could potentially do the same with robo-advice. Bring it to people in a format they’re used to and use already. And then it will be in a shape that people recognise and it’ll become more mainstream.

By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.


This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.