Using technology to drive client engagement with the advice process
The relationship between adviser and client is at the heart of building trust and creating confidence in the advice process. With the cost of living crisis, and people facing growing pressure to meet their current expenses let alone plan for the future, the role of the adviser in navigating complex financial decisions has become even more important.
However, while financial advice remains very much a people business, to deliver consistent and compliant advice effectively, firms need to embed technology throughout their processes. By using the right tools, you can not only enhance efficiency but also strengthen those human connections, providing a superior client experience that encourages greater engagement with the financial planning journey.
Navigating economic uncertainty
While inflation figures have fallen significantly from the highs of last year, that doesn’t mean the crisis is over. The latest data from the Office for National Statistics (ONS) shows the Consumer Price Index rose by 3.4% in the twelve months to February[1].
Although prices are now rising more slowly, they remain above the Bank England’s 2% target and, overall, are far higher than they were two years ago. According to research by Nationwide, average family energy bills have risen by 63%, fuel by 39%, food by 32%, rent by 26% and mortgages by 22% since 2021 and 43% of responds say their financial situation is worse now than six months ago[2].
Other ONS statistics released in February show that the Bank of England’s efforts to reduce inflation pushed the UK into recession at the end of last year, with growth during 2023 as a whole just 0.1%[3]. These early figures may yet be revised upwards (or downwards), but they underscore the fragile nature of the UK’s post-Covid economic recovery and the potential knock-on effects on people’s finances.
Most advised clients will be well-prepared to weather short-term financial storms. However, the extended nature of the crisis and the resulting hikes in interest rates pushing up mortgage costs have affected a wide range of people.
Analysis of advised platform fund flows by the lang cat found that more money has been withdrawn from investments in 2023 than any other year. The consultancy’s research with advisers cites the need for investors to support themselves and family members with increased household expenses as a key reason for adjusting financial plans[4].
Similarly, research last year by Royal London found that a third of all workers had looked at reducing or stopping their pension contributions, blaming the cost of living and rising mortgage costs as key factors[5].
Under these circumstances, keeping clients engaged is even more crucial. Reducing or pausing pension contributions will mean missing out on employer contributions too, but if it’s a choice between pension payment or mortgage payment, difficult decisions must be made.
For other clients, it may make sense to pay down a mortgage using invested wealth to avoid paying more in interest as rates increase. Or if a client wants to help loved ones who are struggling, it’s important to be sure they aren’t jeopardising their own financial future in doing so.
However, advisers can only provide support with these important financial decisions when they are kept abreast of changes in the client’s financial situation.
Expanding financial forecasts
Technology plays a pivotal role in addressing these challenges. Client portals, for instance, offer an easy, secure way for advisers and clients to communicate and share information. Given the greater use of technology in all areas of our lives, clients also increasingly want instant access to information. Rather than waiting for an annual review, having easy-access to their data to find out what is happening to their investments in real time is increasingly becoming part of the service expectation.
And it’s not just younger clients who want to access information digitally. Jeff Lange, CEO of The Financial Advice Service (TFAS) and an intelliflo client, finds that most often it’s older clients who are already taking an income from their investments that access intelliflo’s client portal. He says: “We’re most likely to see someone in active drawdown regularly using the portal to assess their portfolio and give us updates on any changes in circumstances or new objectives, rather than someone still in the accumulation stage making regular contributions.”
To help advisers improve client access to their personal financial information to better visualise their financial future, we’ve just added financial forecasts to intelliflo’s client portal. This allows clients to plug their financial data into a simplified cashflow modelling tool, so they can see, through a series of interactive graphs, how different ‘what if’ options affect their finances.
We have found that cashflow modelling really brings a plan to life for the client, and advisers have asked us to extend the functionality to our client portal. By improving the client’s understanding of their financial position, the consequences of different actions and their chances of achieving their goals, cashflow modelling can drive deeper engagement with the advice journey.
When talking about future aims and ambitions, it’s not always easy for clients to know what is feasible. Putting these tools in the client’s hands means they can play around with different choices at their leisure – like retiring early, paying for a child’s wedding, or taking a once-in-a-lifetime holiday – before having a more detailed conversation with their adviser to put real plans into place.
As Aishling Costello, Head of Customer Solutions at intelliflo, explains: “By giving clients a range of scenarios to consider, they can start to have a look at their long-term objectives. It gets them out of the here and now, and thinking instead about what they want to do in the future and whether it’s possible.”
The tool pulls through the client’s data from the portal and also reminds them to add missing information to help ensure that you have a complete financial picture when you discuss their options.
Encouraging clients to add their own financial data via the portal can be incredibly enlightening. When we added Open Banking functionality two years ago, it was embraced so enthusiastically by advised clients that they added £20 million of non-advised assets within three months!
By fully leveraging the data your clients are willing to share, you can build more meaningful connections and drive engagement. It can give valuable insights into client behaviour, so you can better anticipate their needs and tailor recommendations to suit the individual’s circumstances and aspirations.
Supporting regulatory compliance
Aside from the client benefits of using portals and tools to deliver greater data transparency and drive engagement, technology also plays a key role in supporting firms in meeting their regulatory requirements.
The value of ongoing advice is clearly coming under the regulator’s spotlight following the implementation of Consumer Duty. It recently wrote to 20 of the biggest advice firms asking for information about the delivery of their ongoing advice services[6]. While the majority of firms provide a great deal of value for their ongoing fee, as with everything, evidencing compliance is a crucial part of meeting the regulations.
Having a portal that allows clients to access their financial information whenever they want, so they can check they are on track, see what different small changes make and experiment with different ideas, helps underscore the value of the advice you provide.
At the same time, the management information available from these tools provides further evidence of the value of your ongoing service to the regulator.
The option to put the portal in your firm’s branding is also a powerful reminder of the importance of your role in the client’s finances every time they access information. As Jeff Lange puts it: “As the portal is in our firm’s brand, we’re a constant companion for the client, so to speak, when they access their financial planning information. It reinforces our unique position as the intermediary between the consumer and the wider marketplace and helps clients recognise the value we provide.”
By embracing technology, firms not only improve their operational efficiency but also enrich the client experience and strengthen trust. Client portals, cashflow planning tools and data analytics all play a crucial role in supporting advisers in delivering personalised, proactive advice, while at the same time driving greater client engagement and creating deeper relationships.