As a profession, we’re stuck on the general public’s perception that getting financial advice is about what product they should have.

    I think this misconception has also driven many of the product-focused offerings from robo advisers. But as we know, this is not where the value of good financial advice lies.

    Good advisers are service-focused and successful advice businesses look after their clients well. That is why client satisfaction is high. Research from Boring Money shows that 90% of advised clients are very happy. This is where the human element of a hybrid advice offering will be critical to give clients confidence, reassurance, and clarity to manage their money better.  

    Businesses can create trusting relationships with clients using digital solutions through engaging processes; the last 18 months have demonstrated this. But to work, it will still need to be a service-led proposition and rival the same satisfaction levels with clients. 

    It’s fairly obvious that hybrid advice businesses need to use technology exceptionally well. This is where the onboarding, data capture and systems and processes need to be digital to create a robust and repeatable service offering that is consistent. 

    It currently takes 10-12 hours to onboard a client in most advice firms

    We have to look closely at all the elements that make up this process currently and look for ways to use technology as leverage to create an engaging service that gets the client more involved in building the advice. 

    This is not always data input; businesses could also use innovations such as open banking and finance to do some of the heavy lifting in creating a picture of the client's circumstances.  

    Lastly, to shape this offering, we need to consider who the main target market for these services will be: Millennials are half the UK workforce. They are interested in investing, and they are also most affected by the advice gap.  

    Their options to get advice is limited

    Only 10% of people make use of professional financial advice. There is no digital service providing holistic financial advice for people on average incomes. There is almost no accessible advice in language most people understand - 30% of people are put off saving or investing by confusing jargon.

    This underserved market would also have long-term implications on advice businesses. Research by Schroders reflected that 65% of inheritors would not use their parents' advisers. This poses an obvious threat to the future of the profession.  

    There is also a mental health connection – 88% of people say they lack confidence with money and 32% say this impacts their mental health. What’s more, 24% of millennials want more meaningful financial planning and 5.3m people would pay for affordable financial advice.*

    There is an obvious barrier that needs to be factored in

    It’s interesting when you start looking outside of the world of financial services for comparable transitions. One that stood out to me was commercial flights. 

    In 1970 flying was too expensive for the average person - only 15% of people regularly flew. A big reason why it became more affordable to fly in the US was deregulation. 

    This is an interesting point to think about in financial services and something I believe will be essential is for regulation to be more flexible to truly reach more people with a service offering like hybrid advice.

    I do think regulation in the UK is too reactive, and it stifles innovation. Regulation  is often misinterpreted, not always relevant and rarely updated proactively. 

    The FCA needs to be more open-minded to allow the hybrid advice model to thrive. I think this is recognised, the FCA sandbox are attempting to do this, but more needs to be done to allow businesses to change the status quo.   

    I really believe that hybrid advice is a creative opportunity that will give businesses a chance to create new and interesting service propositions. 

    Making financial advice more affordable is something we need to work towards. 

    Digitally-focused propositions with human input where it matters will be the way forward, and that is what hybrid advice should offer. With our experience of advising clients, financial advisers should be more involved in creating these services. It could be the game changer that we desperately need, and I think we should grab the opportunity. 

    *References:

    https://ilcuk.org.uk/wp-content/uploads/2018/10/ILC-UK-The-Value-of-Financial-Advice.pdf

    https://www.experianplc.com/media/latest-news/2019/as-millennials-mature-their-spending-power-is-set-to-soar/#:~:text=Experian's%20Spending%20Power%20Index%20reveals,grow%20by%203.2%25%20in%202020.&text=Millennials%20will%20expect%20to%20spend,for%20those%20aged%2041%2D45.

    https://www2.deloitte.com/global/en/pages/about-deloitte/articles/millennialsurvey.html

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