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Dynamic Planner CEO Ben Goss – 6 key areas for 2021

14 December 2020

Dynamic Planner’s CEO Ben Goss sets out below what he believes are six key issues for the financial advice market in 2021.

1) Remote advice becomes the norm: COVID closed offices and forced advisers and clients behind doors, and that has had a transformative effect on the way advice is delivered. After some initial teething problems, many advisers have experienced a productivity dividend, as video conferencing and screensharing have replaced face-to-face meetings and time spent on the road. Many clients – and most notably many older clients – have embraced this new way of communicating. At some point in 2021 there may be an internal clamour to return to the face-to-face meeting. Firms should resist this and focus instead on reaping the benefits of remote advice.

2) Personalisation is key to client engagement: Consumers have had to find a lot of their entertainment virtually in 2020 as pubs, cinemas, shops and sports facilities all closed. As such, more and more are experiencing the personalisation that technology can deliver, whether that be individual recommendations on Netflix, ‘customers like you’ notifications on Amazon, or targeted online exercise classes via Zoom or Peloton. Increasingly, this expectation for tailored and personal experiences will move into other sectors, and wealth management will need to adapt. Technology is the driver behind this ‘mass personalisation’, and advice firms will need to consider how they use tech to drive greater personal interaction and engagement.

3) An increased focus on value for money: The FCA’s attention may have been focused elsewhere in 2020, but we can expect the regulator to return to the topic of value for money next year and for their gaze to fall on advisers. Already there have been mutterings about whether it is ‘fair’ that all clients in a firm pay the same percentage fees and receive the same level of ongoing service? Regardless of individual views, advisers will need to focus on demonstrating and articulating the real value that they add. Upgrading the annual review process will be a start; perhaps more effective will be moving to a series of smaller, more regular interactions based around effective risk-based cashflow planning that increase client engagement and add up to greater value overall.

4) Sustainability moves front and centre: The pandemic has forced many people to reassess not just their finances, but their priorities, their life choices and even their mortality and the legacy they wish to leave. There is now a far greater understanding of how investment markets can influence genuine societal change, and consumers will expect the wealth management industry to play a much bigger part in creating a more sustainable, even a more equitable, world. Advisers will need the skills and tools to not only capture a client’s individual ESG preferences as part of the suitability requirements, but also to tailor portfolios based on those preferences. Perhaps most importantly, they will need to monitor and report accurately on an ongoing basis to assure the client that their specific choices are being properly managed.

5) ESG becomes a fundamental factor in risk analysis: Consumers now expect and demand businesses and organisations to operate by ESG principles, but this will lead to a number of transition risks. An example is the recent UK Government decision to bring forward the ban on new petrol and diesel cars to 2030. Large firms, and perhaps entire sectors, may find that similar decisions affect their own plans to transition to new ways of working. Some will thrive, some will merely cope, others will fail. Risk analysis models will increasingly need to take this ESG transition into account, particularly in terms of fund risk profiling.

6) Brexit firmly back on investors’ minds: Brexit took a back seat in 2020 for understandable reasons. In the background, progress has been fraught in finalising a trade deal between the EU and UK, and as we leave the Union on 31 December it is doubtful all issues will have been fully resolved. We should therefore expect a great deal of uncertainty in the early part of 2021, with the potential for currency shift and associated short-term impact. The Brexit news flow will not necessarily be wholly negative, however. It is likely a flurry of trade deals will be announced next year which should cheer markets. Furthermore, Boris Johnson’s inclination appears to be to build our way out of the current economic slump, and in theory he should have greater flexibility to do so. All this means that some asset classes will perform better than others, and clients will only maximise opportunities and minimise risks by having properly diversified portfolios with true global reach.

Professional Paraplanner