Financial advice: Together, we can ride the waves in the sea of uncertainty
Feb 23, 2023 1:07:15 PM
In a year where uncertainty and inflationary pressures loom, the financial planning sector faces challenges but also interesting opportunities. In this blog post, Chet Velani, Managing Director at EV, discusses how evolving the delivery of financial advice, embracing technology, and focusing on the client's needs can help advisers differentiate themselves, improve efficiencies, and future-proof their business.
Providing greater financial planning clarity
No one can dispute that over the next year, challenges will be confronting the financial planning sector. The economic situation in the UK in 2023 looks and feels uncertain, to some extent owing to the shocks to the system sparked by some off-kilter fiscal decisions last year, as well as the inflationary by-products of the Ukraine war, including those leaps in energy prices for everyone.
Only a very few individuals are immune to the surge in the cost of living, influencing what people decide to purchase, save and invest. That being said, I also see interesting opportunities in the months ahead, which I’d like to focus on here.
There is a great big opportunity for the financial services industry to better support individuals who deserve greater clarity in their financial plans. Of course, there are risks from persisting inflation and recessionary pressures. Still, as with all periods of uncertainty, these times serve to remind us of the real value of advice given to clients by calm, reassuring professionals.
Looking ahead, seeing the potential
I’m expecting to see more interest in automating the advice process, by bringing in hybrid solutions designed to blend digital and traditional approaches, as well as purely digital systems that can direct consumers towards the more straightforward and easily understood products such as ISAs and investment accounts. All this, of course, depends on the complexity of advice being given and the nature and desires of advice firms’ targeted clients.
The success of advisers and planners ultimately depends on keeping the client at the centre of their proposition. In practice, this means supporting clients throughout the advice journey by using the most appropriate and productive channel for delivering the firm’s service – effectively and profitably.
Consumer Duty coming into force, when added to the FCA’s thematic review of retirement income advice, will, I’m sure, bring greater scrutiny of both the advice process and the outcomes for retail investors. However, this opens a window of opportunity for firms to review and further develop their offering to meet the regulator’s standards… while providing great service in their market.
Evolving provision, reducing cost
Advice delivery has to evolve. Technology is bound to play a sizeable role in improving efficiencies within the sector this decade. An obvious step will be integrating and harmonising IT systems to reduce the need for multiple manual interventions. But this in itself won’t be transformational in cutting costs. A step change in costs for firms is attainable if investors can be prompted to do more for themselves, right from the outset of the relationship, reducing the time pressures on advisers and admin staff and ultimately driving down the cost of giving advice – improving bottom-line performance.
The way I see it, changing how people interact with financial products and services will be the real driver of transformational improvement – whether it means servicing clients profitably in less time or serving more clients in the same amount of time. This is imperative for everyone in the UK with money to invest, as adviser numbers appear to be stable. Still, somehow more people will need to get access to regulated advice. I feel optimistic that we're going in the right direction with increasing tech adoption and more automation.
We’re doing our part with our focus on developing digital tools as part of enabling hybrid advice – essentially giving firms the capability to empower clients to do a lot more for themselves online, such as providing onboarding and fact-find information and identifying objectives, with the adviser stepping in when complexity requires intervention, including value-add activities such as tweaking plans or explaining results.
Our hybrid offering includes a suite of adviser tools - our EV Pro suite - which covers risk suitability, investment and retirement planning, across both accumulation and decumulation. Advisers are able to assess, build and stress-test plans with minimal effort, whilst algorithm-driven back solves help advisers find solutions to achieve client objectives.
Questioning convention, focusing attention
Advisers know their clients’ needs best, and I wouldn’t wish to preach, but this time of year can be a good time to ask yourself a few questions about the service you’re providing now, and how you want it to look in the future:
How does our current service stand up against the regulator’s aims?
Does our market offering genuinely put the client at the heart of the proposition?
How can we differentiate our offering from our competitors?
How can we support our clients across guidance, digital, hybrid and traditional advice, based on their advice needs and desired level of support?
How can we future-proof our business to ensure younger individuals become clients in the future?
How can adopting automation and moving to digital or hybrid advice help increase our market share or reduce costs?
Delving into these questions should keep attention focused on the challenges across financial services. I feel it’s up to all of us in the industry to seize the opportunity to take the necessary steps to ensure more people can build a comfortable, financially secure future.