This is the Nedgroup Investments podcast a space where you can learn more about how Fund Managers, the funds they manage as well as getting up to date and important developments affecting the investment world and how they might be relevant to you. I’m at the Nedgroup Investment Summit in London with Roger Portnoy. Roger is a fintech founder, entrepreneur, consultant. Roger, you were in fintech before fintech was even a word. Correct. From all your years of experience of travelling the world, of being involved, how when one hears these words that become trendy d o you differentiate between something that is just the fad or something that’s going to have a big impact? And which things do you think are going to have a biggest impact over the next sort of 10 years? I think it’s quite difficult when you first start seeing new types of technologies and new types of business models emerge to know exactly which ones will be the winners. I think what you need to do is ask yourself is, is this new technology or disruptor solving a really important problem? Are they addressing a global need? Have they created something that changes the game in terms of efficiency, velocity, profitability? Right. And really, you’re always trying to measure all the technologies that you say against those benchmarks. Okay. So in terms of your second question, what things are emerging now that are going to change. I think number one is it’s fair to say that technologies are using artificial intelligence, using machine learning to either improve efficiency, gain optimisation or optimise outcomes and introduce new business models are going to thrive. And I don’t think there’s any one segment because it’s in payments, it’s in wealth management, it’s in banking. So in all of these streams, in the financial service, what we’re really looking for are are there companies that are able to deploy new types of solutions based on using machine learning capabilities that really change the nature of efficiency, velocity optimisation. Great, a nd if we look at specifically now, you know, narrow amber to financial advice, financial advisors. A lot of that industry has been fairly similar for a number of decades, but you anticipate quite a big change in the next decade. What do you see as the those big changes? Yes. So I think it all starts with know your client. I think the traditional approach is to know your client has been driven by quite manual based processes of gathering information, somewhat manual processes of analysing that information for planning and for developing solutions, for wealth building purposes or wealth conservation purposes. And then somewhat manual processes in terms of the dialogue and conversations that they follow, okay, so if you know your client has spent a lot of work and a lot of tedious work and a lot of manual interactions, right? So that’s kind of what I think’s going to change. I think know your client i.e. customer relationship management is going to become so much more about “I already know who you are from a transactional perspective. I already understand somewhat what your lifestyle is about.” What I really want to figure out now is what makes you happy, right? What are you really trying to achieve in your life? Right. How can I help you achieve those outcomes? So I think the technology is going to take away a lot of the insight building, a lot of the decision support framework and a lot of the solutions as well, because the solutions won’t require humans to create them. They’ll be machine based. But getting to that core of those three things will be about suddenly having the opportunity because of the presence of these machine systems to focus on that conversation. And many advisors would say that their clients really value the human touch, that they are perhaps retired and less digitally aware. Will individuals who want to be advised, trust computers, trust digital solutions? Or will they be looking for a hybrid? I think we will start much more with hybrid. So I think that the next five years, 2020/2025 is about machines facilitating. Okay. I mean, I didn’t get to it in my speech, but there’s two options you always have with technology. Let it disrupt you or let it advance you. So I think in the first five years of this decade, there’s gonna be a great opportunity for advisors to use technology to advance that conversation and to support it in a way that they haven’t been able to before. And then it allows them to think about changing the way they give their service, i.e. they don’t have to necessarily focus on, it’s a review process once a year, twice a year. It’s event driven and reactive to my client’s situation. It’s about hunting and gathering as opposed to basically optimising and growing. So that’s the first five years of this decade. I think in the next five years, we will see the extension of new kinds of machine based advisors emerge on their own. So I think the market will get segmented into people who need occasional advice and who can not afford or do not believe the advisor route i.e. the trusted route is necessarily through a human being. And so they will become offerings and they will win a large share of the market either with the help of advisers as firms or without them. But I think it won’t happen until 2025 and onwards. And if you’re an adviser sitting today and you might be an independent or a small practice, this could all be quite daunting. What would be your one piece of advice for them to say this change is happening? If you saying this is how you can thrive. Right. Right. It’s a good question. I mean, because as you say 80% of practices are actually small businesses. That’s the problem. The 20% who own a certain amount of clients have resources available to them. I mean, what we are seeing in the UK at least is you need to make a choice. If you’re going to choose to become technology light, digitally light, then you truly must develop really world class expertise in your areas of focus. So, for example, retirement, it is possible to live in a world as an adviser, which is very technology and digitally light, not empty, but light and focus on the outcomes post-retirement because those are a lot of technical questions which aren’t helped so much by digital solutions and sophisticated technologies. They’re helped by tools. But if you’re not in that ilk, my advise to most of these people would be seek safe harbour. So I think what you need to recognise is consolidation is coming. This ability to run small businesses in this space is going to be compromised a decade from now. So I think the question they should be asking themselves is, I want to keep practicing? If that’s what they want to do. Where do I find the best partner to help me maintain my integrity and my independence, but give me safe harbour? So I can take advantage and use technologies, gain training, gain access to succession, but not give up my business. Great, thanks, it’s some really fascinating insights. Thank you very much. Nedgroup Collective Investments is an authorised collective investment scheme manager in terms of the Collective Investment Schemes Control Act. Nedgroup Investments does not provide advice on financial products and will only give you factual information. Forfurther details on our funds and to view our terms and conditions. Please visit Nedgroupinvestments.co.za.