Financial services in the UK has a lot of catching up to do in terms of the digital revolution. You could say the industry is currently doggy paddling.
In fairness, it is often easier for start-ups to launch modern products and services than it is for older companies to undo decades of prehistoric processes and rebuild a technology-led offering.
So, where does this leave those of us currently in financial services? I’d say it leaves us on the edge of a new era. A dawn of a new age.
As an aspiring financial planner, I've been envisioning my future offering for some time. One of the things that excites me about moving into the profession is the ability to design my value proposition and service from the ground up.
For context, I am on the brink of turning 30 and I'm two exams away from attaining the diploma in regulated financial planning. I’ve been working towards the qualification since 2019 and secured an admin job at a financial advisory firm in early 2021. My background is varied, having worked in IT sales and also, a stint of founding and running a catering business in Bristol.
While I may be viewing the profession through rose tinted glasses, I believe my age and varied work experience are an advantage - the profession can only benefit from young people coming in from different industries. New viewpoints and ways of working are sure to shake things up and lead to a more varied landscape of services for consumers to choose from.
As you may be able to tell, I am excited for the possibilities that lie ahead
I believe that financial planning is the future of the profession. The internet has eroded away the competitive advantage of traditional product-led advice.
Knowing how to open an Isa or invest in a fund is no longer scarce knowledge. Investing advice is now an ‘off the shelf’ commodity and a service that focuses on this offers little value to the client of tomorrow.
On the other hand, financial planning, which is centred on human interaction, cannot so easily be commoditised by a search engine. Software cannot yet compete with, or replace, human connection.
Therefore, the future value of the profession does not lie in product selection or investment management, it is in the human relationship - the one aspect of the job that cannot be automated or commoditised.
A digital-first approach
My vision is to utilise technology to catapult financial planning into the future, with a digital-first approach. I’ve heard this approach be called ‘hybrid advice’. However I believe it will soon just be the norm.
A digital-first approach allows for everything to be centred around the client experience. Automation and online services can be utilised to ensure an efficient and frictionless service. Time spent on low value administrative tasks can be eroded away, freeing up the time of clients and businesses.
In a webinar ran by Nick Hall, head of advice at Wealth Wizards, he stated that in a real-world case study the end-to-end advice process was reduced from 35 hours to 9 hours, through digitalisation and automation - from onboarding the client to writing the suitability letter.
And more time results in more opportunity. Businesses can service more clients and spend more time on high-value work - which will lead to better client outcomes.
Millennials are the clients of tomorrow
There is a reason Amazon is a Goliath of the internet, they have consistently provided the easiest way for people to buy products online. If a product provider's website is less efficient, or cumbersome, the site is closed and Amazon secures another sale.
Financial planning will therefore need to be offered across devices, so a website and mobile app is paramount, and it should be utterly painless to interact with the business. No paper forms, no waiting times. Chat bots should be on hand to assist with a mundane task such as completing a fact find.
As well as modernising the service to cater to changing consumer expectations, it should also help address the advice gap.
There are an estimated 38 million people in the UK who receive no financial support
A digitalised service could offer different tiers, to cater for different needs.
Pete Matthew, from Meaningful Money, operates a three-tier approach, which I think is a good place to start. He has provided free content online for the past ten years, he offers ‘do it yourself’ products and access to a financial academy and finally, for a smaller number of clients, he offers a full financial planning service.
Pete says himself that not everybody needs advice and I agree, however that does not mean they do not need any help. A model such as Pete’s caters for all types of people and also acts as a funnel. While people may begin by engaging with his free content or purchasing a membership to his academy, some will end up as full planning clients in the future.
To conclude, I believe the future of financial planning is bright, where more people can gain access to financial assistance in a cost-effective way. But in the new world, it is the consumer who holds the power. They’re no longer restricted to local products and services, they can search far and wide to find the right business or professional to work with.
Therefore businesses need to match new consumer habits, adapting to how people wish to interact with them, if they want to survive.