Cuffelinks’ article, “Scenes from a roboadvice pitch to angle investors” provoked much comment. There was an air of cynicism in the feedback that roboadvice would never really replace current incumbents. The client acquisition costs (CAC) were too high and those with existing franchises would prevail.
But predicting the future is very difficult and even futurists, while entertaining at corporate conferences, have limited success. The Washington Post recently ran an article about what people in the 1900s thought the 2000s would look like. Their predictions were comical.
The financial industry is locked in its current mindset and sees no immediate danger. But we forget that there are many more institutions that touch the mass market, probably materially more effectively than financial service companies. Who said Coles, Qantas or Telstra can’t take a crack at our industry? Roboadvice will materially reduce the cost of entry for many players. Traditional providers will need to be wary of disrupters buying a minority stake in a roboadvice start-up and offering very low-cost product to their sizeable client base.
Here is my prediction how an ordinary person may relate to financial services in the near future, having been tempted away from traditional providers. As with the people in the 1900s, my imagination is constrained by what I know is technologically available now. But there is a huge amount being refined by the day.
A glimpse at a possible future for Tracy
It’s raining outside as Tracy catches the 400 bus from Randwick Hospital to Bondi Junction. It’s been a long shift as a nurse, her energy spent on a full ward with the usual number of distressed patients and family.
Sitting on the bus Tracy looks at her iPhone and sees a few messages from friends and a couple of notifications on NursePlus. The first notification advises Tracy of new job positions at the nearby St Vincent’s Hospital and the second notification tells her that her total wealth changed by $3000 last month and to click through to see why.
The NursePlus app is an increasing favourite of Tracy’s since she downloaded it three months ago. Her friend recommended it to her and by registering Tracy was in the draw for two tickets to the upcoming Cold Chisel concert.
NursePlus keeps Tracy in touch with the major events occurring in her industry including changes in accreditation rules, union activity, and nurse discussion blogs and chats. Tracy particularly likes the special deals, including discounted tickets, Coles specials and women’s fashion.
NursePlus shows how Tracy and her husband spend their money in an easy to understand way. She is impressed with NursePlus’s ability to combine transaction data from her Credit Union with those from her husband’s Westpac account. As she thumbs through the expenditure categories Tracy realises how much repairs and maintenance are now costing on the second car. “Time to sell”, she thinks.
No wonder NursePlus is prompting her to save more if she wants to retire at 65. That’s only five years away. Tracy has played with NursePlus’s retirement tool and realised she could come up short. NursePlus has shown her she has at least a 25% chance of not having sufficient superannuation if she wants to go on her overseas trips every three years and give $50,000 to her daughter to help with her house deposit in a couple of years’ time.
Tracy decides to transfer her super to NursePlus. She thinks, “Why not?” Tracy never visits her old superannuation fund website and NursePlus seems more in tune with her personal and financial needs. Tracy could never afford one of those fancy financial planners and NursePlus provides all she needed.
To move her super, Tracy uploads a picture of her driver’s licence and Nurse’s ID. She electronically signs her authorisation to allow NursePlus to manage the funds transfer. With a push of a button Tracy knows NursePlus will handle all of the paperwork. These days, electronic signing and authorisation make life so much easier, she thinks.
Tracy feels in control
For the first time in her life, Tracy feels in control of her finances. She can see where she can make savings and if she is on track to retire. She can see on one screen what she has in the bank, super fund, term deposits and that rental property she owns. She can even see her frequent flyer miles and flybuys.
Tracy sees another notification from NursePlus. There is a ‘two-for-one’ offer at the Event Cinema at Bondi Junction. She hits the button to buy the tickets. Tired as she is, a night out at the movies sounds great. As Tracy relaxes on the bus, she wonders if her husband has signed up to BusinessPlus, the accounting app she showed him.
Donald Hellyer is Chief Executive of BigFuture. See www.bigfuture.com.au.