Back in June, we asked the audience of advisers at a conference we held what they saw as the biggest threat to the future success of their business. The answer that outstripped all others was “self-select websites”, with two-thirds of the audience putting this as their number one concern. The second most feared threat was “direct investment platforms”.
There is no doubt the digital revolution is having a major impact on the financial industry and the way it delivers products and services. According to research by Microsoft, UK households last year possessed an average of 10 connectable devices, with six of those being hooked up to the internet. Smart phones, tablets, laptops and game consoles all offer access to the web, while super-fast broadband and powerful search engines such as Google mean we can access information on anything instantly.
Such access is having a profound effect on the way we live our lives and what we expect from the companies that supply the products and services we want. This is particularly true in the financial sector. A few years ago the term “robo-advice” was virtually unknown. However, search “robo advice UK” on Google today and it delivers more than 412,000 articles related to the subject.
Wikipedia defines robo-advisers as “a class of financial adviser that provides portfolio management online with minimal human intervention”. The concern among some in the adviser community is that the robots will take over completely, leaving them redundant to all but those who require only the most complex financial planning. I do not believe this will ever happen.
Self-select websites, direct investment platforms and robo-advice are all gaining in popularity, not because the technology allows them to develop but because they tap into what many consumers want in this digital age: instant information and solutions to their particular needs.
While I believe this need for instant information will continue to grow, there will always be a place for human interaction. This is where financial advisers have a real advantage and an opportunity to cement a profitable future.
The opportunity lies in adopting the technology that enables them to offer clients the best of both worlds: instant access to consolidated information about their financial status (including how much is in their bank accounts, their mortgage payments, investments and savings regardless of the provider, plus access to self-select low-risk financial products) combined with the ability to tap into the expertise of a fully qualified adviser as and when required.
Access to the adviser here is key, whether that is face-to-face or remotely. The traditional adviser model, which relies on face-to-face interaction is not only costly to run but can also be a barrier to advice for those more comfortable being in front of a screen than a person. This situation is only likely to become more common.
The good news is technology is enabling advisers to adapt their models and reinvent themselves in a way that is far more exciting than simply survival. It is equipping the industry with the tools to take on the self-select mentality and blend it with personalised advice.
We know the Government is keen to see advice available to a broad section of society. The challenge for advisers is to work out how to run profitable businesses that can service the needs of all types of people. Portals where advisers can provide their clients with 24/7 access to view their financial status are already a reality and a major step forward in helping to change the image of the traditional paper-based advisory firms.
The development of these portals will continue to evolve, providing access to all sorts of products and solutions that have previously been out of reach for many reasons, not least the cost-effectiveness of offering them via the traditional route.
Technology is already enabling the advice industry to respond to do-it-yourself investing. The only thing that will hold it back is failure to grasp the opportunities it offers. I strongly believe advisers are in the driving seat to provide omni-channel access for clients.
As Microsoft’s chief envisioning officer Dave Coplin told our delegates back in June: “We should see the digital deluge as a gift, a wonderful opportunity to do incredible things.” I could not
have put it better myself.
Nick Eatock is executive chairman at Intelliflo.