Daily Fintech Conversations

FinTech Innovation: from Robo-Advisors to Goal Based Investing and Gamification (Paolo Sironi, Wiley 2016)

Innovation in financial technology has only begun to disrupt the wealth management industry, and is leading to a tectonic shift whereby investors and tech-savvy financial advisors can become the new price-makers in the global democratisation of banking. FinTech Innovation delves deeply beyond simply describing the disruption examining, in detail, the underlying processes to illuminate exactly what is happening and why its happening so that you can engage with and thrive in the new marketplace.

Through a behind-the-scenes look at Robo-Advisors and their part in the turnkey, low-cost personalisation of Goal Based Investing, this cutting-edge guide opens a tangible path for using technology to gain a competitive advantage, establish your value as a human advisor and “rewire” investors’ minds to positively engage with investing.

This authoritative guide pulls back the curtain to reveal:

  • What Robo-Advisors are today and how they will evolve.

  • How human financial advisors can optimise their businesses in response to regulations, customer demand and technology.

  • What gamification has to do with investing, and why it can produce better investors.

  • Where you need to rethink what you know about investing and let technology do the work.

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This is The book in Fintech Investing. I had the pleasure and honor of endorsing it

I open up the stage to a discussion on what @paolo.sironi forsees as the solution in Investing in his book.

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thanks, ordered my copy on amazon.

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It seems to after reading this book it is lots of layer cake Paolo could have covered this in his his prior book but held off AI to flog another book full of ambiguous layer cake. this prompts the question has Paolo ever created any personal innovational or otherwise company / startup ? As OK I understand I will be vilified but just "another "consultants advice

I have not yet read the book, am looking forward to doing so soon, so I really don’t know whether he covered AI properly or not. All I know, speaking as both a book author and a blogger, is that the publishing schedule around a book makes it hard to cover fast moving markets/technology (a blog is better for that). @Jonathan I must say that impugning motives feels too much like an ad hominem attack and that is the sort of behavior that we strongly discourage on Fintech Genome.

First and foremost my comments where not a character or personal “attack” on Paolo Sironi. One could not but respect his work at IBM which as a visionary leader would also mean Paol’s knowledge of AI would be considerable fast moving markets or retrospective blog. My comments simply call out the difference in working for a large company as an advisor and the knowledge belief & passion required when starting from ground zero. If you write a book and DailyFintech help with the PR one should not expect me to necessarily like the emperors new suite even if it is "the sort of behavior that we strongly discourage on Fintech Genome"
I do understand your rationale should you remove my membership and all prior comments.

Hi Jonathan, thanks for your views. The previous book you might have read “Probabilistic Scenario Optimisation” is fairly quantitative and sets the grounds for using exhaustive enumeration techniques to make portfolio construction and simulation in a way that can solve common problems of MPT and it allows to create graphical representations for Goal Based Investing. There is a need to make sure we are told transparently the risks and rewards over time when it comes to investing, net of costs (don’t even think most Rondo-Advisors 1.0 do it) as they still don’t). This is one of the scopes of new market regulation post-financial crisis (which, by the way, opens for probabilistic frameworks in Europe). “FinTech Innovation” wants instead to be way more narrative and cut the pis in between (not too tech, not to quantitative) and explain the fact that innovation in wealth management is primarily a problem of business model more than technology “per se” or social media habits. Regulation is forcing firms to transform from “packaging of products” (hence marketing dominated) into “packaging advice” (hence experience dominated) as the asymmetry of information gets realigned and compliance costs soar. But it is difficult to see how a Robo-Advisor 1.0 could be useful in this journey because changing what you sell and how you get compensated is not an easy task and what they do today is way below standards. As such, TECH innovation as we see today in Robo-Advisors 1.0 is not enough (a sexy UX can bring some customers but wont make your lunch … hence banks are keeping at bay). We are not discussing if digital is good or bad, but what digital means in financial services. The time of testosterone drive marketing is over (because or regulations, not because of Millennials as Millennials would grow as greedy as their parents when time comes to their investing). And smart consumer branding is not enough when it comes to investing, because investing and consuming are not equal (behavioural finance), reward and pain are felt differently (time matter a lot, as it brings uncertainties to financial return but not to wearing a gucci bag reward), hence regulation is needed (because it i not easy to say if we pay the right money for the right value in banking). Therefore, to make best usage of new digital experiences “FIN Innovation” is also required (Goal Based Investing on graphical representations and intuitive narratives) to create BETTER advice, not only CHEAPER advice. As ever in life, Rome was not build in a day but on layers to be the charming experience we can enjoy today, with all its beauties and shadows. This book can’t compare, buy I stay course on its strengths. Would be truly nice to discuss more and learn further about your views, maybe a call?
Ciao, Paolo

Just a friendly note about setting up a company: PSO is itself a piece of innovation in finance, no digital design compares, and sits at the core of the work of CAPITECTS GmbH, the joint-venture newco I created in Germany in 2008 when I moved there from Milan as managing director and employee #1. Is till remember the day I went to the Notary with co-partner Jochen and had to get all those German translations. CAPITECTS started with a business contract and pipeline from banking partner (pipeline first, product second), never lost a euro until GmbH existed, gave work to 20 people in 4 years who successfully entered the IBM family when IBM bought funding partner Algorithmics in 2012 and all subsidiaries. For us, it was a success, but I know I was not a successful as an entrepreneur: I didn’t become a unicorn :slight_smile: They told me I am an acqui-hire (??) whatever that means. Yet, we certainly convene that in 2006-2008 not many influencers we follow today had a clue about the need to personalise personal finance by mixing innovation in FINance and TECHnology, create added value, operate on portfolios instead of retrocession-driven products. All the best and friendly.

“They told me I am an acqui-hire” Liking the apt terminology (aren’t we all) a new one that brought a smile related to the trend for click-bait “listicles”.
For me at this stage Robo-Advisor = admin.
Ref “regulation is needed” agree for many reasons not least future social unrest mindful of Tolstoy’s quote "Wealth is like manure. It stinks when it piles up, and it’s only useful when it’s scattered"
Ref "smart consumer branding’ … Thank you certainly made me think. The complexity of your financial transitional decisions / advice action reaction forces is beyond my knowledge base and intellect. I am not sure if your first para is about that small hugely significant % of very wealthy investors or the mass lower value middle market one wonder if the gap is widening (probably)

My thanks for your reply, as for my views, numbers don’t lie : )
Made me smile: http://www.nytimes.com/2016/09/04/magazine/letter-of-recommendation-the-useless-machine.html?_r=2

Respectfully

Peter