Technology has a big part to play if we are to make financial planning and advice more accessible to more people, says Nick Eatock, CEO of intelliflo.
If you’ve ever wondered if there’s a limit to the national celebration days we can have, a quick online search suggests there’s not. The first week of October brings us National Cinnamon Bun Day, National Techies Day and National Name Your Car Day, among many others including, of course, World Financial Planning Day on Wednesday 4 October.
You may scoff, but there’s sometimes an important and timely point to be made. Raising awareness of the value of financial planning is among the aims of World Financial Planning Day. Among its main messages is that financial planning isn’t just for the affluent; everyone can benefit from having a financial plan and working with a financial planning professional. Few people in the advice industry would dispute that. But it’s not that simple, as we all know.
Access for all
Making financial planning and advice more accessible remains one of the biggest challenges facing the industry. Just 11% of UK adults have paid for advice in the past two years, according to recent research from the lang cat[1]. It identified several barriers, with trust coming out on top as the factor that most needs to improve.
However, the study also found that of those who did pay for advice, almost 90% said it represented good value for money. This is supported by a 2021 report from Royal London, which revealed that on average, people taking professional financial advice were £47,000 better off after 10 years[2]. In other words, once the industry gets people through the door, their perception of its worth increases significantly.
There are several reasons why so many people are unable or unwilling to pay for professional financial help. Cost is perhaps the most obvious. The lang cat estimates that a fifth of the UK population has less than £10,000 in total wealth and assets, and 37% have below £25,000. Significantly lower than the typical adviser or planner would work with.
So, how can firms broaden their client base while maintaining profitability?
Lowering the barriers with tech
The good news is that the technology needed to help firms service a broader client base is already with us, and continues to evolve. It’s increasingly acknowledged that to have any chance of scaling up services and supporting more customers, advisers need to use technology more effectively. The benefits are clear, judging by the most recent Intelliflo eAdviser Index, which measures customers’ business metrics against their use of intelliflo Office.
The Index found that ‘Champions’ – firms maximising their use of technology – generated 54% more revenue per adviser and 76% more ongoing revenue per adviser than ‘Explorers’ – firms not making full use of all available functionality. This provides yet more evidence that successful adoption of technology provides a genuine competitive advantage at a time when margins are thin and regulation, such as Consumer Duty, stretches resources. And by helping firms generate more revenue per adviser, technology paves the way to serving a wider range of customers.
Working with it, not against it
There’s a lingering perception in some quarters that using tech to widen access to financial planning means losing the human factor. In fact, effective use of technology allows advisers to focus on what they’re usually very good at – building client relationships and implementing the financial planning process.
By taking care of the admin and the more straightforward tasks, technology gives the professionals more time to deliver the aspects of financial planning that tend to be most highly valued by their clients. These are the more emotional facets of the process, such as behavioural coaching, providing reassurance and guidance, creating trust in the plan and developing a strong relationship. According to Morningstar research earlier this year, three-fifths of respondents cite emotionally grounded reasons like these, rather than financial ones, like being on track for retirement and setting up a specific product, as the reason they hired an adviser[3].
Technology can support advisers in delivering the most valuable parts of the client relationship in several ways. Firms can use technology to facilitate a ‘hybrid’ approach, where some clients are serviced mainly through digital channels – perhaps out of choice, or where their needs are less complex – and others engage more directly with advisers. More commonly, technology such as client portals and cashflow modelling tools enable client data to be populated automatically, delivering a quicker reporting output and more time to focus on the client relationship.
Applications that enhance the financial planning process in perhaps less obvious ways include data analytics software that helps firms gather more accurate data on their clients in order to deliver more personalised services and communications. This becomes increasingly valuable in a firm seeking to widen its client base.
By reducing costs, increasing efficiencies and boosting revenues, effective use of technology gives firms the headroom to serve a wider range of clients, help narrow the advice gap and gain a long-term competitive advantage.
[1] https://langcatfinancial.co.uk/2023/05/23/tackling-the-advice-gap-one-solution-at-a-time/#:~:text=The%20headline%20finding%20from%20the,advice%20came%20out%20on%20top.
[2] https://employer.royallondon.com/globalassets/docs/adviser/misc/br4pd0007-exploring-the-advice-gap-research-report.pdf
[3] https://www.morningstar.com/financial-advice/why-do-investors-hire-their-financial-advisor
