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How To Transform Hyper-Personalization in Financial Advice

Key takeaways

  • Regulators and financial services firms need to work together to address the advice gap.
  • Financial literacy should be included in personalized advice so that clients have the autonomy to choose the right financial products for themselves.
  • Transparency of the firms’ operation builds trust in clients

Robert Roome

Principal Consultant at Sionic

Principal Consultant at Sionic

Qn 1: What are your thoughts on the recent increase in hyper-personalization in financial advice? 


From a regulatory perspective, it’s interesting that there’s been a misconception that some robo advisors in the UK are more than a few basic models suggested to customers after filling out a questionnaire. The adoption of hyper-personalization advice differs significantly regionally. As much as the advice gap should be addressed by regulators experimenting with ideas, incumbent firms also have a role in adopting new solutions. The fear of tighter and multitudinal regulation could be why firms in Europe are hesitant to step into the realm of hyper-personalised services. However, regulators and firms need to meet halfway in their solutions to change the financial services landscape positively.

Qn 2: What is an example of how personalized financial advice can work in the future?


It’s all well-giving people investment recommendations and personalised advice but if they don’t understand the concept of products they’re directed to, the outcome might not be better than without recommendations. Thus, financial literacy needs to be provided along with personalised advice. A point of interest is deeper goal planning solutions and looking into reaching the client’s goals. For example, based on a client’s health and probability of illness, the solution would be model-specific retirement living goals. A sophisticated goal planning could generate deeper KYC and better recommendations. Firms could combine the KYC data with clients’ literacy to provide tailored content and insights for an even stronger proposition. 


Qn 3: What is your company doing to increase customer engagement and confidence in their financial institutions? 


Many fintech companies are transparent about what their firms are doing, from the costs and charges to methods and impact of the fees on clients’ portfolios. Firms are gradually opening up about how the prices or processes are doing against their clients’ goals and how on track they are to meet their clients’ requirements. It’s essential to be seen to put the customer first; for example, some firms have client panels and bring in key clients to comment on initiatives and product launches. With transparency and being more in tune with clients’ expectations, and advocating for their well-being, firms could build more trust in the relationship with their clients.

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