Financial advice in the age of disruption
During our virtual Change the Game conference at the end of 2020, Mark Polson, principal of the lang cat, led a panel session looking at financial advice in an age of disruption with financial services consultant Abbie Knight, The Verve Group’s Cathi Harrison, and Ian McKenna, founder of the Financial Technology Research Centre. Responding to questions from the adviser audience, they discussed how Covid-19 has shaped advice this year and what the financial planning profession may look like in the future.
One thing I think we can all agree on is that 2020 saw a huge shift in advisers and clients looking to engage digitally. I know from conversations with advisers that many have wanted to move from paper to electronic applications and digital account management for some time, but some parts of the industry have been slow to change. To be fair to providers, many have been dealing with other IT priorities in recent years, but remote working and lockdown brought about by the pandemic has forced a switch to digital in order to keep operating.
Time to embrace change
As Ian put it during the panel session, necessity has been a huge driver for change, not just amongst advisers but also for manufacturers. So many things that have been in the ‘too difficult’ box for too long can now be done. You really can tell now who are the companies that are going to be the good business partners going forward; if providers are not embracing change in the current environment, it must be time to look elsewhere. The world will never go back to how it was previously.
Ian added that he knew of financial advisers who are seeing twice as many clients as previously because they aren’t spending time travelling. This tallies with our latest research which found that almost two thirds (61%) of advisers expect to spend more time on clients in future because they aren’t commuting to the office as often.
Taking control over digitisation
So will Covid19 result in a long term shift in how advisers use technology? Abbie certainly thinks so. She told the panel that a lot of advisers say they want to take more control over the digitisation of their processes and even launch their own platform to be more in control of their own destiny. Advisers are realising that the financial planning software is available today and they can own it and develop it themselves at a far lower cost than they would have seen before. In intelliflo’s research earlier this year, three fifths (59%) of advisers predicted that increased adoption of technology will make firms more efficient.
A huge catalyst for innovation
Cathi’s experience is also that Covid-19 has encouraged firms to look at new ways of engagement, new ways of charging and even different markets. She said during the debate that it’s surprising how much innovation can be done within traditional advice firms – the pandemic has been a huge catalyst for change. Again, this corresponds with our research: two thirds (68%) of firms telling us the coronavirus restrictions have provided more time to think about and implement processes and business efficiencies. In addition, the realisation that a business need not be tied to a physical office led to over a third (38%) of respondents considering a move to a more nationwide service. More than a quarter (28%) are thinking of changing proposition to suit remote servicing.
More demand for robo advice?
However, our research found that two fifths (40%) are not convinced the current switch to digital will lead to greater demand for ‘robo-advice’. Ian’s view during the discussion was that, although we have yet to see detailed, truly automated advice services in the UK, they genuinely are not far away. Financial advice is a complex process and automating that process takes years of work, analysis and system creation, but we are getting very close to these services going live.
“There is a huge opportunity for technology to take advice from being a luxury that few can afford to being a utility available to everyone that needs it.”Ian Mckenna
The last year has seen huge change in the advice sector, with Covid-19 dramatically speeding up shifts we were already seeing towards paperless journeys, client portals and virtual meetings. As we move to a post-pandemic world, many of these processes will become the new normal, with advisers and clients embracing digitalisation to speed up transactions, improve efficiency and cut costs.
However, what has remained constant throughout the Covid19 crisis is the importance of the human adviser in building trusted relationships, developing each personal finance plan, creating engagement and providing reassurance. Advisers need to recognise how these strengths can combine with technology to create the best proposition for their clients.