In international markets such as the United States, robo-advisors have become increasingly popular but the industry is also growing in South Africa, with Indwe Risk Services launching a bespoke insurance advice assistance programme in 2017.
Robo-advisors are a class of financial planners that provide automated, algorithm-based portfolio management advice without human intervention. They are web-based platforms that use the same software as traditional advisors, and provide appropriate investment or insurance advice after posing a range of questions to the investor.
The benefits of robo-advisors include:
- low cost
- convenience
- ease of use
- encouraging self-help
- attracting younger clients
- reducing servicing costs
- encouraging new entrants to a broader range of insurance and wealth products
- initiating client service in markets that are under-serviced
Even though the technology is becoming more sophisticated and personalised, robo-advisors do not get involved in the more complex aspects of risk and insurance management, and they cannot create completely customised portfolios without human intervention. This service may be too limiting for some consumers, so it’s recommended that they rather use an experienced, professional financial advisor.
It’s important that robo-advisors not be regarded as replacements for traditional financial advisors and indeed, none of the well-known start-ups in the American market refer to themselves solely as robo-advisors. The two should work as a hybrid model where financial advisors include robo-advisors into their practises.
By merging the two, you get the personal touch and high-quality advice that is received in a face-to-face meeting with an experienced financial advisor, but with the cost benefit of automation. This means you can offer a multi-channel service to clients, appeal to a broader market and make advice more comprehensive, easier and more affordable.
For these reasons, Indwe is piloting a Virtual Sales Advisor (VSA) where their clients will still experience human interaction but their personnel will be assisted by the robo-advisor to ensure all advice is TCF compliant.
This tool is an example of how Indwe is using digital technology to enhance the customer experience, in terms of conducting a better needs analysis and assisting the broker to identify solutions to meet the customer needs.
VSA was initiated by Acuideas, their Product Research and Development business, and it will be launched at selected branches during the year.
For more information about Indwe’s Virtual Sales Advisor and to find out how robo-advisors can make investing and insuring easier and more affordable, call us today on 0860 13 13 14.