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Two ways to stay ahead in the advice landscape

Advisers need to ‘suck out’ the costs from their businesses and make best use of their major USP – their client data – both to stay ahead of increased competition and to take advantage of the opportunities coming in 2015

Professional advisers need to be looking at how they can use technology to reduce the costs of running their businesses, deliver the kind of online experience consumers are going to be demanding and also to utilise the data they have at their disposal to keep their businesses relevant to their client base and ahead of the competition eyeing the market.

Despite the ubiquitous nature of smartphones, clients are still expecting advisers to provide a personalised service. Yet at the same time, the ability provided by mobile devices to consume data meant that they were creating an online experience that would only increase the demand for more information, adding to the risks and pressures on adviser businesses, delegates heard in The Big Technology Debate session at the Personal Finance Society conference.

To some extent, adviser firms have trained their clients to expect a certain level of service from them but if business owners are to reduce the risk in their businesses and help build in better margins, then one of the challenges they face is how to get their costs down, said Ben Goss, chief executive of Distribution Technology.

Goss said Distribution Technology had undertaken end-customer research and asked how they accessed their portfolio data. “Eighty percent of people said they either used a spreadsheet or received a statement in the post. That is the industry in which we operate today, which is principally manual and paper-based,” he said. “We then asked investors whether they would like to go online and provide more information ahead of a meeting with an adviser. Twenty percent of people said yes but two thirds said they’d prefer their adviser to do it.”

This showed that there is an overwhelming demand for personalised service across adviser client banks, but it is one that will be increasingly be difficult to sustain, Goss argued. This is especially so with the new flexibility around pensions come 2015, which will see opportunities opening up for advisers as the more affluent people seek advice on the best retirement solution for their needs. But it would be difficult for advisers to take advantage of the opportunities, he said, if they tried to deliver the same personalised service across all their clients.

Goss said: “From April next year, if I’m 60 years old and I have a pot of money and I have a range of options open to me, I’m going to want advice. So it is very likely, certainly for the next few years, that you and your businesses will be their port of call. You’ve got to get costs down in order to run a successful business, first to be able to serve those clients that you’ve built up over the years but also to take advantage of the massive opportunity that is coming next year.”

What was needed Goss suggested, was to encourage clients to do some of the work themselves, which could be done by providing the means for them to access the data and information and conduct a certain level of research before approaching the adviser for the advice.

“The great opportunity is to use technology to suck out the cost of interacting with your client, whether that is through screen scripture, or by allowing the client to do more online themselves. For example, in the My Planning App we have a simple risk profile tool that the adviser can get the client to use; it captures information, allows advisers to publish relevant documents for the client to read, and gets the client thinking about their situation before they meet with the adviser. This cuts down time to consult with that client and it has been very popular.”

With the rise of online financial advice services, particularly those in the US with an eye to crossing the Atlantic, there was going to be increasing competition for adviser clients and for the mass affluent market that advisers could serve if they used technology alongside the advice process.

Advisers needed to be thinking ahead, said Nick Eatock, chief executive of IntelliFlo.

He said the predominance of the smartphone in peoples’ pockets was a game changer greatly increasing their ability and desire to consume data. “They consume this information because they want to,” he said. Information as part of a traditional face-to-face advice process is now complemented by online technology to allow the customer to see the information they want when they want.

Eatock stressed the importance for advisers of having quality data in their systems, to ensure they delivered the kind of service and experience that their existing customers and potential clients would be expecting.

“Whether you are serving customers face-to-face or online, the better the quality of your data the better your business will be. That’s a fundamental,” Eatock said. When firms have been through the data cleansing process, he said, “the overwhelming feedback was very positive because firms were able to see exactly what they had and could start using the data. They felt they had gone very much 21st century.”

Goss concurred and suggested that the advance of the ‘robo-adviser’ operations in the US were being hampered by lack of data. He said: “Advisers have agency tags, these mean you get access to data on your clients, where they are invested, how long they’re invested, which no-one else has. This is a source of huge competitive advantage for the independent financial adviser businesses.”

However, he added, having client information is not enough if you want to take an ongoing fee. “Just providing someone with information about them does not warrant an ongoing service where a proposition is based on a percentage of AUM for instance. What you need to be doing is thinking about adding value to that information, helping people see whether their portfolio remains in the right risk profile and whether it remains suitable for them. Without technology that information is a very expensive to deliver. With the regulator focused more and more on whether advisers are providing an ongoing service when taking an ongoing fee, you have to think how you do that in a cost effective way – the cost to serve. Clearly technology is fundamental to making that happen.”

Eatock said that while change within the industry had made it difficult for advisers to think about these kinds of strategic issues, “taking time to work ‘on the business’ not just ‘in the business’ was now more important than ever. “Embedding these processes within your business will pay immense rewards. Do not be scared by these disruptive business models but don’t discount them either. Use the weapons you’ve got in your armoury to maximum effect and you’ll be very successful.”


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