Technology has a crucial role to play in helping government and regulator to deliver personalised financial guidance and more affordable advice, says Wealth Wizards.
A recent amendment to the Financial Services and Markets Bill saw Treasury Committee chair Harriet Baldwin propose a new ‘personalised financial guidance’ capability in the UK to help engage more consumers with their finances.
To date, many financial services firms have shied away from offering guidance due to a lack of clarity on what constitutes guidance versus advice. The amendment, if included in the final Bill, would allow guidance to be given to savers and investors which considers their personal circumstances, giving advisers confidence that as long as they do not recommend a specific product or course of action, they would not be considered to be giving regulated advice.
The FCA has also set out proposals for a ‘simplified advice’ regime for stocks and shares ISAs, following recent research from the watchdog which found that 4.2 million people in the UK held more than £10,000 in cash and are open to investing some of it.
Mark Kiddell, chief commercial officer at Wealth Wizards, said the recent announcements from government and the regulator show “growing momentum” for the financial services industry to address the advice gap and improve financial wellbeing in the UK and said technology will be critical.
Kiddell said: “The challenge is how to reach as many people as possible in a way that makes business sense for the industry. Wealth Wizards believes the best way to do so is through the use of technology.
“Digital guidance and advice tools can be set up by trusted entities, such as financial advice firms, banks, building societies and employers, to provide a personalised, consistent and user-friendly service. The tools can deliver a service which aligns with individuals’ personal goals and objectives, at low cost to businesses and at scale.”
Kiddell said guidance can be made personal by asking a series of non-intrusive questions, which will allow advisers to fully understand a consumer’s current financial situation. By offering consumers the ability to input alternative budget, saving and investment figures, they can assess any impact upon their future financial management and wellbeing.
Kiddell commented: “With digital services available 24/7, people have an accessible, convenient tool from which to share information with any key contacts. Those with more complex financial needs can be referred to a financial adviser for more specialist help. We anticipate that as they become more informed, consumers will also start to appreciate the value and necessity for financial advice, particularly around retirement, which will prompt many more people to seek professional help.
“The digital journey can be deployed within providers’ offerings and is the means for them to bring on and serve many more customers.
“The intention of the government and regulator is clear, and the industry needs to start aligning its capabilities with the very real opportunities this offers, both for businesses and for the financial wellbeing of UK consumers,” he added.
