Alexa…Should I do a fund switch?
This article was originally commissioned for Inner Workings, a monthly column written by Tom Murray, in the February 2019 edition of the Actuarial Post.
Among the biggest sellers this year for Christmas gifts were voice-controlled assistants that allow people to control various operations in their houses from the comfort of their own sofas. Alexa from Amazon is the most famous but other tech companies, such as Apple, Google have similar devices now, which respond directly to the owner’s voice and carry out basic tasks such as playing music, timing dishes being cooked, answering general knowledge queries and providing news and weather information.
If one buys smart devices, such as light bulbs, heating controllers and or blinds, then one can switch on the lights, close the blinds and turn on the heating without moving a muscle. The fact that many people in these smart houses have paid substantial amounts of money to be able to control their homes by voice and then fork out even more on a Fitbit or Apple Watch to nag them into getting up after they have been sedentary for too long or haven’t managed their “10,000 steps” today, seems to be an irony which goes straight over their heads. It’s a bit like those people who drive to the gym to do cardio when they could achieve just as much by walking to the door of the gym, turning around and walking back home without joining, particularly as they would be carrying a much heavier wallet throughout the journey.
To my mind, voice-controlled assistants are a fantastic solution currently in search of a problem. One of the problems that would seem to be perfect for them is the gathering of information that is needed for a proper financial review. In the same way that health reviews require large amounts of data and a smart watch can be of great help in automatically recording blood pressure, temperature etc throughout the day and identifying general health trends, so too automation in the field of gathering financial information in order to get a holistic picture of a client’s financial health would be a great bonus.
Up to recently, the best way to gather data was via an interview with a financial adviser, who came to the client’s home and spent a few hours asking the client questions about their financial habits and practices in order to build up a comprehensive picture of their behaviour. Then the adviser asked the customer for their financial goals and produced a series of recommendations for new financial products or adjustments to the client’s existing ones in order to meet those goals.
This is a very expensive approach in terms of time and, as a result, many people are unable to afford the cost of having this type of financial review. Recently, much work has been done in automating this financial fact-finding task, but given the scale of the data required, it does mean that a large amount of data entry must be undertaken by the customer. Many people find that entering screen after screen of data is very off-putting, and it is difficult to make websites intuitive enough for those who are not especially computer literate. Therefore, this approach tends to be restricted to those who are used to working consistently upon computers and don’t find the task daunting.
This still leaves a large segment of the population unable to get to the stage where they have enough data loaded into a system in order to have a proper holistic financial review carried out. Enter Alexa, or any of her friends. People who find it difficult to enter the data directly into the computer would find it much easier to respond to questions being asked by a voice-controlled device. This would be a much easier way to gather such a large volume of information and it could be done at the convenience of the client.
Of course, the voices of these assistants are a little robotic and much work would have to be done to improve the level of interpretation the voice-controlled devices can put on the responses they are getting, but this is an area that should be looked at early by insurers. Rolling out simple apps is one stage of a digital first strategy and works for simple products but for fuller financial reviews more sophisticated levels of data required, meaning that much thought must be given to those whose computer literacy skills are not high. Using voice-controlled assistants means that it is possible to gather large amounts of information across the smartphone platforms, where many young people practically live but where the input of large amounts of data is particularly difficult.
Financial fact-finding is certainly an area where the capabilities currently being displayed by the voice-controlled assistants would be very useful, as they would essentially act as intermediaries for the individual. They also would have the capability to instigate the activity at a later stage, e.g. to arrange a review of your financial status when variations in your investments indicate that you should be aware of where you are, and possibly make some new decisions, e.g. switching funds if it becomes aware of a movement in the markets.
Alexa’s true talent surely lies in the harnessing of this interactive capability to control the important things in your life, such as your ongoing financial health. And given the proven negative impact of a sedentary lifestyle to one’s longevity, maybe she would give life assurance bonuses to those who get up and switch off their lights themselves.