I’m getting really tired of this. First we were told that the role of the human adviser is so valueless that it can be replicated by some lines of code and a pretty website; now we’re being told it’s so devalued that it’s going to be replaced by Snapchat or Twitter.
From what the young people tell me, Snapchat is a kind of messaging service (and we all know what that means, don’t we, kids?) and as far as I can tell, its unique characteristic (putting it charitably) is that the messages you send only last for 10 seconds before they vanish – unless the recipient has the presence of mind to screenshot the message or image.
I’m no social media expert (again, putting it charitably) but I have grave concerns for financial advice conveyed by a medium that only lasts for 10 seconds.
And Twitter only allows you to send 140 characters at a time. One hundred and forty characters is me clearing my throat. What meaningful advice can possibly be conveyed in 140 characters – or even in 140-character messages strung together? Is there, in fact, a worse way of reading anything of length than on a smartphone?
I’m sure the creative brains (again that charitable thing) have thought this through and will have some terribly clever solution. But that’s only the tip of my iceberg of disquiet.
What happens when – as it will – the advice conveyed by this service, or by any of the others that will inevitably ape it, goes wrong?
To whom will an individual turn for recompense? The advice remediation program being undertaken by the Commonwealth Bank – the so-called Open Advice Review Program (OARP) – at last count, in August 2015, had 613 full-time-equivalent employees. And it had conducted more than 50 training sessions to bring those people up to speed. (There is an update to these numbers due in January – probably after this article goes to press, but before you read it.)
That’s why the progress of resolving cases of alleged poor advice have proceeded slowly in the initial stages, but will accelerate dramatically.
The scale of this remediation program is quite startling, and it’s no doubt quite expensive. It would be interesting to compare the cost of OARP with the amount of compensation CBA eventually ends up paying. If I were Ian Narev – and luckily for us both, I am not – I’d be investigating recouping some of the cost by spinning off the OARP division into some sort of independent dispute-resolution-scheme-for-hire that can continue putting to use the skills its people have developed over the course of being trained for the OARP. Just a thought.
Anyway, it is churlish to point out that OARP should not have been necessary in the first place; but it was necessary, and programs like it may well be needed in future by other organisations. Commonwealth’s experience gives an insight into the Herculean task it can be to put right poor advice.
Robo-advice services can disclaim away all they like the responsibility they have for providing advice that is relevant and suitable to the recipient, but people don’t take kindly to being given a bum steer. And there are lots of smart lawyers out there.
Let’s not forget that the basic business strategy of many robo-advice and fintech start-ups is not to create anything of use or of value, but simply to be bought out.
Snapchat and Twitter. While you couldn’t make this stuff up, just wait for the first stuff-up.
