Why leveraging adviser technology can deliver better client outcomes

This blog discusses our recent findings on why technology can be leveraged to achieve better outcomes within your advice process and, more importantly, for your clients.

There was plenty of discussion at a recent industry event about an issue going to the core of why financial advice exists: how to deliver better outcomes to clients in retirement drawdown. While it was acknowledged that the key to this was harnessing the best available technology to simplify the advice journey, particularly leveraging that tech to achieve enhanced client outcomes, a number of considerations surrounding the central issue weighed heavily on people’s minds. With the adage that all roads lead to Rome, each aspect merited debate en route to getting to the heart of how advice can be delivered better through tech.

It's a truism that drawdown planning is one of the most sensitive and intensively scrutinised activities across the client advice journey. No one wants to mess up someone else’s retirement. And no one can argue against the need for the advice process to be made more systematic and yet simultaneously more understandable to the client looking for – and relying on – professional, trusted help.

Amid the talking and catching up among the participants, an array of considerations exercised the brain's trust. These talking points extended from clients’ experience of advice to the treatment of vulnerable clients and from Consumer Duty concerns to, you guessed it, advisers’ use of technology to make pension drawdown work the way it should.

Understanding your clients' experience with advice

While we recognise that technology and technical capabilities open up new pathways to provide advice better, for some, there are more fundamental elements to think about to improve how the client experience – particularly during advice – is delivered.

There’s a continual challenge about the time taken to build and ensure client suitability, with the imperative to strike a balance between communicating core investment information plus disclaimers and taking care of individual clients' more personalised needs and expectations.

But, in general, there’s high confidence in advisers and the quality of advice they provide, albeit there are some practical difficulties in ensuring that the evidence/documentation of suitability is solid and credible.

For larger advice businesses, it’s particularly important to deliver what could be termed ‘mass customisation’, i.e. harnessing the right processes and technology to resolve the potential challenges inherent in larger operations and thereby do business compliantly and always in the best interests of each client.

All in all, while not overlooking the opportunity to apply more detailed and sophisticated risk analytics when constructing drawdown analysis, it’s agreed that there is a significant amount of work to be done to improve client service all around.

Heightening awareness of vulnerable clients

There is a broad consensus about cultivating higher awareness of vulnerable clients and their needs. The discussion reflected the importance of training and the attendant complexities and identified a continuous need for vigilance about vulnerability. This is not something that goes away after ticking a box.

You can’t just answer yes or no to the question; advisers need to be ultra-considerate when interpreting a client’s new circumstances or recent events that can lead to need – and where prudent, they should adjust the proposition to deliver appropriate engagement.

Talking of which, deeper engagement with the wider family was recognised as a good tactic in mitigating some of the risks while not always possible or achievable. This would bring additional opportunities to protect the client from the detriment of vulnerability. Notably, this would also assist with longer-term intergenerational wealth transfer issues.

In all respects, when it comes to vulnerability, the goal must be to maintain and build on the trusted relationship between client and adviser, the latter demonstrating empathy at the right moments.

Adding Consumer Duty to the compliance mix

It’s a given that scrutiny from the regulator is embedded in the advice journey. The forthcoming rules labelled as Consumer Duty will impact different firms differently. There have been mutterings in the sector questioning ‘why Consumer Duty?’ when TCF rules and customer-centric compliance have existed for years. 

However, the FCA is pressing ahead with final consultations, and implementation by April 2023 is on the cards. This drive is a reminder that client suitability and welfare remain at the forefront of the regulator’s mind.

What’s new in town is that Consumer Duty puts the spotlight on communication and reporting right across the product manufacturing and distribution journey – no place to hide for anyone involved in creating and providing investment vehicles for consumers. This may cause tension between parties should disputes and complaints arise, as each endeavours to minimise their exposure to penalties. It seems unlikely that advisers will change the fundamentals of their advice; most are confident about the quality of advice and their client-first service delivery. Rather, their focus will be on capturing documentary evidence that their advice is suitable for the client, and ready for any regulatory visit. Some will look to update their processes and training to get there. Others are amenable to adopting technology dedicated to supporting their compliance with Consumer Duty.

Read our accompanying blog; FCA Consumer Duty requires evidence, not just action, to find out more.

Implementing advice technology wisely and carefully

When technology people and advisory businesses assemble in the same space, a crunch question bouncing around is: ‘Which tech is really up to the job required?’

There are benefits to be won by embedding greater statistical analysis within the advice on pension drawdown. However, it’s hard to argue against the conclusion that, given the high-level sensitivity to multiple market risks – including drawdown, sequencing and inflation – as well as the criticality of avoiding risk and compliance pitfalls, any opportunity to ensure advisers have the means to deliver the best client outcomes possible, at sufficient scale, must be seized. 

Of course, this is where the thorny issue of integration between systems, or lack thereof, enters the equation. There are considerable challenges in developing advice technology to support individual components of the advice journey from start to finish, owing to the limited degree of integration currently possible in the real world of advice. Furthermore, not all APIs (the smart links between systems) are created equal. For those advice businesses going for best-of-breed multiple solutions, each chosen because they do a particular thing well, it’s tough to avoid broken or cul-de-sac processes.

At present, there’s no consensus that the disjointedness of much technology will disappear any time soon, except by avoiding multi-systems completely – not easy as things stand. So understandably, advisers remain cautious about adding additional advice tools. This is an obstacle, but one way forward is to view evidence of live integrations before committing to the purchase and implementation of new tech.

The professional advice world is certainly ready for the onset of a carefully crafted end-to-end financial planning tool such as EVPro, which is purpose-designed to empower advisers to assess, build, stress-test, review, solve and document their clients’ financial plans, including retirement drawdown, all within one simplified solution that’s easy to use. 

The success of retirement drawdown plans is bound to increasingly rely on such tech, allowing the adviser to focus on enhancing client relationships while depending on the equivalent of a smoothly functioning engine room to keep the journey on course.

So what next?

If you recognise the need for leveraging digitally enhanced advisory processes but you’re unclear on how to begin your digital transformation journey, our Guide to Modernising Your Financial Planning Advice Process and Technology is a handy resource. It provides insights into modern financial planning software and how you can start adopting it.

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