Elston CPD Redefining Adviser Value - Page 12

Tax savings: Our distinction between economic value-add and emotional value-add initiates a nuanced distinction of an advisory role and an expert’s role. Advisers need a breadth and depth of knowledge while experts possess in-depth knowledge; advisers must listen and ask questions whereas experts must tell and provide solutions; advisers should provide insights by synthesizing information whereas experts must demonstrate expertise by analysing the information towards a concrete recommendation.11 Effective client-engagement entails using the advisory functions first and gradually transitioning towards the functions of an expert. While the functions of an expert may be outsourced to technical experts or programmed into software, only human interaction allows clients to freely express their concerns and goals in a way that they are comfortable, enabling a truly personalised interaction. This makes the role of advisers indispensable in the context of investors who are uninformed about financial principles and lack the confidence to make financial decisions. Conclusion In this paper we present a fresh perspective on how advisers will continue to offer value in an era where many human functions are being outsourced to automated financial technologies. We offer a distinction of the advisory functions based on the cognitive systems of human reasoning they engage with and then argue that those functions that have a high “emotional” currency as opposed to being inherently economic and procedural in nature are likely to be better delivered through human interaction. Creating and delivering emotional value requires advisers to have strong interpersonal skills and emotional intelligence, both of which can be developed through training programs.1 We make a nuanced distinction between experts and advisers. While the new advances in technology may take over the functions of an expert, the functions of advisers will continue to be better delivered through human channels, and human interaction is likely to be valued by investors willing and able to pay for financial advice. 12