VR Makes a Come­back

Vir­tual re­al­ity is seep­ing into wealth man­age­ment, and ad­vi­sors can use it to help clients en­gage with their fi­nances.

Financial Planning - - CONTENTS - BY SHARON ADARLO

Vir­tual re­al­ity is seep­ing into wealth man­age­ment and ad­vi­sors can use it to help clients en­gage with their fi­nances.

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 tools in fi­nan­cial ser­vices can in­volve pro­grams that al­low clients to com­pare them­selves with 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 tool. 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-net­worth heirs, Bab­cic says.

Give a Nudge

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 health care 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 pos­si­ble uses 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 help 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.

To Ed­u­cate Bet­ter

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. “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,” Schouela adds. “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 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,” Sokolin says. “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 its AR glasses, Glass, crit­ics widely panned them. Some ad­vi­sor tech ob­servers re­main skep­ti­cal of both tech­nolo­gies. Bill Win­ter­berg, tech­nol­ogy con­sul­tant to 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 take off in 10 years,” Win­ter­berg says.

Vir­tual re­al­ity can be a use­ful ed­u­ca­tional tool to coax younger peo­ple to save money by show­ing the im­pact of their investments, or lack thereof.

Bill Martin, chief in­vest­ment of­fi­cer at In­trust Bank, tries out VR gog­gles at Fidelity Investments’ client ad­vi­sory coun­cil meet­ing in Bos­ton.

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