Can supermarket self-service checkouts predict the future of hybrid advice?

In April 2012, Nutmeg arrived in the UK as the first major player to offer clients a streamlined way to get investment advice without the need for a human advisor.

More followed in the years that followed, along with dozens of articles and white papers debating whether the future of counseling was ‘theft’. Now, more than a decade later, the answer seems to be a resounding ‘no’.

As we mourn the loss of companies like Scaleable Capital, Moola and Fountain, and bid farewell to WealthSimple as it retreats over the pond, is this the end of the heist story or could there be more to come?

Research conducted by Vanguard in the US earlier this year found that 90% of clients who had a human advisor would not consider switching to a digital advisor, while 88% of those who already use a digital advisor would consider switching to a human advisor. adviser in the future. That paints a pretty bleak picture for the future of ‘robotic’ advisers and a pretty rosy one for those with framed financial planning certificates on the wall.

But wait a minute. Could we be falling into a research bias that skews our thinking and blinds us to how people can change their behavior towards digital advisors in the future?

Asking people who are used to one experience if they would consider switching to another routinely yields negative results in surveys. There are several behavioral biases at play here, such as status quo bias, loss aversion, and uncertainty. In other words, people routinely stick with what they know, feel the loss of an existing service more than the benefits of a new one, and avoid any situation where they don’t know what the outcome will be.

Even on the most mundane levels of life, I defy anyone not to get excited about driving to near-extinct gas stations with pump attendants filling your tank for you.

When you ask someone if they’re likely to give up their human adviser for an automated system, you’re practically asking if they’d give up their first-class seat on the plane to switch to cattle class.

It’s easier not to (status quo), giving up the level of service you’re used to causes psychological pain (loss aversion) and fear of who will end up sitting next to you and what the food will be like. (uncertainty) all combine to make this a meaningless choice that no one would willingly make.

The perception of any service that includes a human will always be valued more than any self-service offer. Consider concierge services, valet parking, personal shoppers, and chauffeur-driven cars as just a few examples where adding a human equals a higher level of luxury.

Even on the most mundane levels of life, I defy anyone not to get excited about driving to near-extinct gas stations with pump attendants filling your tank for you.

But that doesn’t mean that people won’t change when the balance changes to mean that the automated service is faster, cheaper, more convenient and perceived as useful, and they see others using it.

For example, imagine a survey from 15 years ago asking supermarket shoppers if they would switch to a self-service counter. What do you think the results would show? You really don’t need to guess, as such surveys were conducted and found that shoppers were not in favor of such human-free shopping experiences.

Instead of immediately realizing their potential, technologies often fall into a period where nothing happens; no one uses them and interest dies down or goes elsewhere

A survey found that 93% of respondents did not like the idea of ​​self-service counters. That’s a surprisingly similar percentage to surveys that show people won’t switch to a digital advisor. But walk into any major supermarket today and you’ll find the drive-thru areas inundated with shoppers eschewing human checkouts in favor of ordering their own purchases.

When self-checkouts were introduced in the UK, they certainly had teething problems and the usual amount of resistance. Now, however, people can see for themselves that when they shop lightly (for example, basket shopping), what they sacrifice in terms of human contact they gain in terms of speed and efficiency. A similar story has unfolded for airport check-in, post office counters and, of course, petrol pumps.

While I recognize that the retail examples are purely transactional and people don’t require the advice of tellers, the underlying pattern of technology adoption remains similar. Stanford technology research firm Gartner represents the process that new technologies typically follow in their Hype Cycle.


Gartner Hype Cycle

When a new innovation is born, it often follows the life cycle shown in the Gartner visual above. After launch, there is a peak where expectations for new technology are high and media outlets around the world go out of their way to suggest that it will be the savior of any particular problem.

But instead of immediately realizing this potential, technologies often fall into a period where nothing happens; nobody uses them and the interest is extinguished or directed elsewhere.

This is when the tide of innovation ebbs and you can see who’s swimming naked (thanks, Mr. Buffet). Some producers leave the market and others evolve to satisfy early adopters and attract new customers.

Eventually, once people start seeing others using such new technologies, the balance tips and more perceive the solution as useful and feel comfortable using it.

My question is, are digital advisors currently in the valley and climbing the enlightenment slope to see how they can become relevant?

One area where digital advisors are adapting is reintroducing the human in a lighter touch capacity. The latest hybrid advisory proposals follow the pattern of supermarket self-checkouts by simplifying the role of the human to what is valued and letting digital technology do the heavy lifting in the more arduous parts of the process. But are these hybrid advisers an evolution of digital advice or just an intermediate stage waiting for consumers to catch up?

While you may not be familiar with fully automated supermarkets yet, I assure you they are coming.

In my role, I conduct a large number of interviews with financial clients and have seen a growing number of people who would value financial advice but understand that they only need light advice.

When someone recognizes that they want advice in a basket rather than a full cart, they are more likely to appreciate the speed and low cost of getting digital advice and miss out on the need for human intervention. When you start to see this change in mindset, it could signal a turn in fortune for a fully digital future for financial advice.

While you may not be familiar with fully automated supermarkets yet, I assure you they are coming. In the US, there are 29 cashierless Amazon Go stores, and we already have 19 in the UK, where customers simply walk out the door without using a checkout.

It has taken 15 years for customers to reach a comfort level where they are happy shopping without a human. The middle stage of having a teller on standby helped bridge the gap, reducing people’s anxiety about using self-service technology. Now the next evolution seems to be a push towards fully autonomous shopping without human intervention.

In 15 years, will we see the same thing happen with regard to the provision of financial advice, or will it still be a step too far?

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