Successful solutions should be created for the people who will use and ultimately pay for them: the clients. It's a fairly obvious point, but one that I think is missing from the current debates I've read and heard around two new buzzwords on the financial advice block: 'hybrid advice'.
Hybrid advice was born out of the most significant missing component in robo advice propositions: humans helping humans. It think it's largely underestimated how many people need that interaction to help them take action with their money.
Financial planning offers life-changing value to clients, but so many people can't afford this, especially younger clients.
This is where the need for hybrid advice comes from. The idea should be that hybrid advice will help bridge the gap that robo advice is trying to plug. Offering affordable advice and at the same time modernising how advisers deliver advice for the next generation of clients.
The limits of digital self-help machines
Research by the FCA and Boring Money, among others, reflects that people are not confident with their money. People often need reassurance that they are doing ok and want to sense check their decisions with an expert.
When people are already feeling unsure, creating a digital self-help machine to help them decide if they should invest or not, how much risk to take, and where to invest their money, is not really going to improve that lack of confidence. I think this is part of the reason why 'robo advice' has not had the impact many hoped it would.
Most advisers feel that even using the term 'advice' in these propositions is insulting as these services are just a tick box capacity for loss assessment. It was interesting to hear a representative of a robo advice business comment on the number of calls they took in December 2018 when markets fell sharply (I have wondered how many calls they had last March!). It demonstrated a flaw in the initial process. Clients did not understand the journey they signed up for, and experiences like this will not help improve their confidence in investing.
I think financial advice businesses are making incredible progress in adopting technology, but we are not truly innovating in how we deliver financial advice. Everything still feels the same, and advice is still not affordable for most people. Creating more product-based solutions like robo advice doesn't really help with the crux of the issue.
Everyone should be adopting technology
I've seen people describe a digital onboarding process as 'hybrid advice', and I really think we are heading towards missing the point. Using technology in our businesses to create efficiencies so we can serve more clients face- to-face advice is not hybrid advice.
Every industry should be adopting technology to improve; clients expect this from us. It's what people are used to seeing from every other aspect of their life. Your business will go stale if you don't. But this is not hybrid advice.
Hybrid advice should be a way to provide financial advice in a scalable and profitable way for clients who are not being served by advisers at the moment. Just by definition, this means not following the way things are normally done.
It means doubling up on digital processes. This is where the onboarding, data capture and systems and processes can 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 search for ways to use technology as leverage to create an engaging service that gets the client more involved in 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.
Only when this is maximised can we hope to invite those who are currently outside of advice in. And it's then that we can demonstrate our real value to them when they're ready – the steady, human, guiding hand that everyone needs, no matter how good the technology.