Why your financial adviser will no longer come to the phone
Be warned. The robot wars in financial services has started, writes
No one at the branches had a direct telephone number for head office in Dublin. After the fourth attempt I finally surrendered to one of the four unrelated choices.
When asked about the nature of my query my answer was truthful: “I’m at my desk and I’m having a mental breakdown trying to reach your head office”
They still hadn’t the authority to give me a telephone number but a few minutes later a senior person from the company rang. Everyone has had these experiences, no telephone line to anyone, even when the names of managers are emblazoned on websites.
If you think it is going to get better, let me tell you that it is going to get worse.
Following the most recent blizzard of EU financial services Directives, you will shortly have no easy access to human beings, quick financial advice and simple processes. Huge amounts of complex red tape is being squeezed into the consumer contact point and into administration. The outcome is the suffocation of spontaneous interaction and replacement of it with vigorous oversight, recording and taping.
The EU objective is to protect consumers and improve transparency but the result is going to be higher costs, the only response to which is the commoditisation of advice with robots. The Directives themselves read like robots, PRIIPS, IDD, MIFID II, IORPS II. Unless you are rich, this new dynamic is set to radically change your consumer experience.
Fear is the new currency, inexperienced staff are terrified of making mistakes. It is why you cannot contact anyone with experience anymore, it is why no one can write you a letter and why advice will rigidly stick between the ditches of digital algorithms.
Most financial consumers will shortly face advice gaps. Communications will be logged, monitored and parsed for compliance, inbound calls recorded, checked and confirmed by email. The reason is simple, the burden of EU Regulation is increasing the cost of on-boarding new customers beyond the capacity of firms to engage by human contact, except for so-called high value consumers.
Low value consumers are to be marooned, losing contact with human judgement, to be dealt with by email, websites and apps instead. Profit will be measured by how well firms remove human contact from customers altogether.What started with ATMs in walls outside banks is to end with digital human shadows on your mobile phone.Financial services is going auto-pilot.
State regulators are bursting at the seams with a new breed of lawyers and technicians ready to enforce EU laws, matched inside businesses by lawyers and bureaucrats eager to crown their careers. There is a new authoritarianism and the Irish have taken to it with a zeal unmatched anywhere in Europe. The new game is risk elimination, the trophies business scalps and the doctrine, to shovel out ever more ‘stuff’ to be measured.
Investment in technology designed to mitigate regulation can only be sustained by gaining scale, applying bigger resources to control costs. Privately, regulators are pleased, the task is much easier when there are a small number of firms and diminished competition. The mindset ought to be to encourage innovation, competition and growth but instead it becomes one of limitation, control and restriction.
You’ll see this when auto-enrollment Pensions arrive shortly because it has a price ceiling that can only be met by robots, where investment choices will be ruthlessly restricted and where no one answers the phone. You can have any auto-enrollment pension scheme you like, so long as its black.
This year the IORPS II Directive, EU regulation for occupational pension schemes, is due. It will eliminate small bespoke Irish retirement arrangements, those favoured by small business owners. Self Administered Retirement Trusts are to be banned from investing in property using debt. Elsewhere hundreds of thousands of company pension schemes will be herded into half a dozen master trusts by pummeling them with unaffordable new rules. This, you’ll be told is a good thing, by regulators.
To confuse matters, firms are to have different Regulators for different products and activities. The list includes the Central Bank of Ireland and the Pensions Authority plus a cluster of others like the Data Protection Commissioner and the Dept of Justice.The Directives are being imposed on Credit Unions, Banks, Life Offices, Asset Managers, Stockbrokers, Pension Trustees and Financial Intermediaries, each subject to different rules, some applying different interpretations.
Most Irish consumers interact with a variety of these market actors so you can expect a growing blizzard of requests to fill in interminable forms updating your financial data for no credible benefit to you. Spontaneous help will be forbidden in the absence of these financial colonoscopies, evidence that engagement will be profitable and proof that you are neither a criminal nor a terrorist.
Naturally authoritarianism is not going to work. Consumer currency is time. Tolerance is thin for wasting it. Across Europe and, most certainly in Ireland, the consumer reaction to the blizzard of print and form filling will be to tell firms to get stuffed. There will be a consumer rebellion because there is zero incentive to engage unless there’s a benefit.
Regulators will be forced to rethink. In the meantime much like shadow banking, shadow advice will grow in the advice gap. It has already started and marks the opening of the robot wars in financial services.
