6 February 2023

Virtual Reality In Wealth Management?

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When Bill Martin recently donned a pair of virtual reality goggles at Fidelity Investments’ client advisory council meeting in Boston, he was skeptical about whether the technology would be of any use for financial advisors.  

But after a tour through the virtual world, Martin, chief investment officer at Wichita, Kansas-based INTRUST Bank, returned like Neo in "The Matrix," ready to see how deep the rabbit hole goes.

“I’m now convinced that tech-savvy advisors will be incorporating VR into their practices in the not-too-distant future and that the potential applications of this emerging technology are virtually limitless,” Martin says.

First a fixture of science fiction and then relegated to video gaming after a disappointing start in the 1990s, VR is making a comeback, and this time, fintech experts say it will find its place as a tool for advisors to help clients become more educated and engaged with their finances.

VR and its cousin, augmented reality, are just two of the latest gaming technologies seeping into wealth management. Such techniques in financial services can involve programs that allow clients to compare themselves to similar demographic cohorts and determine how they are doing in terms of investing, says Sinisa Babcic, senior manager for financial services at Ernst & Young. Scenarios that allow clients to play out how certain financial decisions will impact them is another technique.  
Gamification as a whole has seen slower adoption in traditional wealth management, where market leaders have been most interested in techniques that educate the next generation of high-net-worth heirs, Babcic says.  

Martin says VR can be a useful educational tool to nudge younger people to save money by showing the impact of their investments, or lack thereof.

“For example, a low savings rate could be visualized by showing a future state of struggling to put food on the table or pay for healthcare services in contrast to a high savings rate scenario that shows a comfortable retirement lifestyle. Retirement plan advisors could use such a tool to positively motivate participant behaviors, leading to improved retirement readiness,” Martin says.

Other use cases for VR involve gauging a client’s appetite for risk by simulating market downturns and offering visuals on how that may play out in their lives, Martin adds.

In addition, VR can be used to train new advisors by simulating client meetings and different, challenging scenarios, making it “much quicker than traditional learn-as-you-go training methods commonly used today,” Martin says.

These various VR use cases have been cooked up at Fidelity Labs, the innovation incubator at Fidelity Investments, says Adam Schouela, who leads the Emerging Technology team at Fidelity Labs. His team has been looking at various financial services applications for VR and AR or a combination of them, specifically for customer education, employee training, data visualization, and collaboration between advisors and clients, or within teams. Think of it as a better way to illustrate ideas, instead of using a whiteboard.

“We are seeing how we may educate better our customers and give them a different type of experience to better understand financial concepts,” he says. “We created an application to understand retirement readiness age. You are presented with decisions and how these decisions impact the age you are ready to retire. It’s to better articulate the impact of those decisions.”

Fidelity Labs just introduced Cora, which it calls a VR "agent." Built using Amazon Web Services' VR application Sumerian, Cora can answer questions on how stocks are doing, pull up company charts, and answer questions on how a company is doing. A client can verbally ask Cora questions in a VR chat room.

Cora is a prototype, and the VR/AR employee training programs are in the pilot stage, Schouela says.

For much of the financial services industry, many use cases for VR and AR have been gimmicky or branding exercises up to this point, says Lex Sokolin, global director of fintech strategy at Autonomous Research. Examples abound such as Ally Bank offering an AR smartphone app where users could catch flying dollar bills.

“I don't think even the big tech firms yet know the right user experience of VR/AR and wealth management is several steps behind,” says Sokolin.

“VR is usually good for emotional journeys, so I would see it as a way to get clients to understand what aging, or retirement, or parenthood are like, and to plan around it,” Sokolin adds. “AR is going to change our journey through the world, creating digital twins out of everything. We can imagine many overlays for budgeting or emotional software, but this is far from being commercial.”

There hasn’t been wide adoption of VR and AR technology yet, Babcic notes, the way that smartphones have. Price and refinement are issues. VR goggles range from $5 headsets at Walmart to $399 for an Oculus rift, while AR glasses, which can retail from $89 to $1,000, are considered ugly and look more like bulky 3D movie goggles by some technology reviewers. When Google tested their AR glasses, Glass, critics widely panned it.

Some advisor tech observers remain skeptical of both technologies.

Bill Winterberg, technology consultant to financial advisors at FPPad.com, splashed cold water on visualization use cases for VR. The presentations may be counterintuitive and potentially overwhelm clients, he warned. But he remained open to the possibility of VR and AR becoming mainstays in wealth management.

“Maybe we can have this takeoff in 10 years,” Winterberg says. “It’s so far out there and so much can change in the meantime.”

Click here for the original article from Financial Planning.

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