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Future of financial planning will combine traditional with latest technology

25 April 2019

Most financial advice firms believe the future of financial planning will combine traditional face-to-face advice with robo-advice, as the industry seeks to meet the changing needs of consumers.

Three quarters (76%) of advisers polled by Octopus Investments, part of the Octopus Group, said a hybrid financial model will be the future, with 81% believing the next generation of advisers will need to incorporate aspects of robo-advice into their offering.

According to the new research, 74% of advisers said accessing financial advice online will be particularly important for younger clients.

Key to delivering a successful hybrid model will be taking advantage of developments in technology while retaining the human touch. Nearly half (44%) of advisers said technology will help free up their time to better service clients while more than a third (36%) said it will encourage competition.

Changes were already underway, with 27% of advisers saying they had incorporated some form of online advice into their business, with a significant proportion (57%) actively considering it.

Only 13% of advisers polled felt robo-advice would negatively detract from the core face-to-face advice proposition, with 11% stating that it doesn’t offer a tailored service and 7% warning that the risk-profiling offered online would be too imprecise to be of benefit.

Ruth Hancock, CEO, Octopus Investments, said: “As many advisers clearly recognise, technology will play an increasingly important role in the future of financial advice, and there are some obvious benefits for the industry. Yet for most people, a smart online interface with some risk profiling is not going to replace the value of a financial adviser.

“Our financial lives are deeply interwoven with our personal, professional, and family lives, which are rarely straightforward. When making big life changing decisions, we need someone who is able to listen, build trust, and empathise with our goals. Advisers know this better than anyone. The real opportunity lies in combining that human touch with smart technology.”

Jacqueline Lockie, head of financial planning, CISI, added: “It’s clear that investor habits are changing, as the next generation of adviser clients comes through. Millennials have different communication preferences with a tendency to rely more on technology and information online.

“However, research has found that young people are still big fans of human interaction and relationship-building, which is key to developing trust. This is why a hybrid model, where face to face advice – underpinned by smart technology – will be key in the future.”

Octopus also asked advisers whether fees could change in line with evolving advice propositions. Three quarters (77%) believe the UK advice market would eventually run on a subscription model, in which customers pay a fixed monthly fee to access advice. However, three fifths said it would take five years or more to happen. Only 11% of advisers said the UK would never be run on a subscription model.


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