Nick Eatock, CEO at intelliflo, and Johann Koch, chief sales officer, intelliflo, believe there are huge opportunities for advisers to innovate and widen access to advice through better use of technology.
Using technology to best effect can make a huge difference to the success of an advice firm. Our latest eAdviser Index, which analyses how our customers are using the functionality within intelliflo office, proves that optimising your technology can transform your business. The latest figures show that Champions, who make maximum use of our software, generate 44% more revenue per adviser and 59% more ongoing revenue than Explorers, who just use the basic capability. Champions also have 28% more clients and 48% more assets under advice than Explorers.
Nick Eatock
Johann Koch
We don’t talk about ‘robo’
So what does best use of technology mean in practice? When you talk about technology in advice, thoughts often turns to robo-advice, especially with the swathe of providers talking about plans for digital advice tools at the moment.
Robo advice is often mooted as the solution to the financial advice gap, which has been a cause for industry concern since the Retail Distribution Review (RDR) removed commission nearly ten years ago. The rules made it less viable for advisers to provide regulated advice to those with lower investible assets, but new solutions to reach these people have been slow to gain momentum.
The FCA flagged a lack of innovation as part of the problem in its evaluation of the RDR and Financial Advice Markets Review (FAMR) at the end of 2020. It concluded: “Although there has been some innovation in the market, in particular around the development of automated advice, there is more scope for further development and innovation of models and services that could serve more consumers at different stages of their lives[1].”
Digital advice tools are not the only way to solve the advice gap. We believe there are huge opportunities for traditional advisers to innovate and widen access to advice through better use of technology, without the need to launch a whole new ‘robo-advice’ service.
Understanding the advice gap
Earlier this year, we analysed the data of over three million end clients whose advisers use intelliflo office to create our inaugural Advice Map of Britain. Among other things, it confirmed what most advisers know already – the majority of advised clients are older, with more than three in five aged between 40 and 60, while just one in twenty is under 30. Yet, as we also know, taking professional advice early can make an enormous difference to your long-term financial security. This is evidenced by research from the International Longevity Centre and Royal London, which found that those who took financial advice were on average £47,706 better off than those who didn’t[2].
The issue for advice firms is that you need to price your services at a level that is viable for your business. With regulatory costs and administrative requirements rising, this often means that holistic financial advice is seen as too expensive or out of reach for those who have yet to accumulate a high enough level of savings. A survey by Canada Life[3] in 2019 found that just 16% of advisers would take on a client with less than £100,000 in investible assets.
The solution has often been to push those with less money towards simplified digital advice services. Yet while it’s good to see this choice expanding, it’s not the only option. Improving efficiency through better use of technology can make a huge difference to the cost of delivering traditional financial advice, providing advantages for firms and clients alike.
The benefits of technology
As our eAdviser Index demonstrates, if all advice firms adopted technology to its best effect, it would be possible for the sector to reach thousands more clients, without the need to hire a single additional adviser. And technology doesn’t just improve your business metrics. It can also help engage your clients with their financial plan, by speeding up transactions when communicating through a client portal and sharing information so they can easily see the impact of your advice on their finances. Using tools like cash flow planning can also help bring the figures to life and more clearly illustrate whether the client will be able to achieve their financial goals and afford the lifestyle they want in the future.
You may think that introducing technology into your advice process will alienate your existing client base. There is a widespread belief that clients at or near retirement, don’t want to engage digitally or lack the skills to do so. However, having evaluated the activity of over 250,000 active clients on the intelliflo personal finance portal, while registrations are spread fairly evenly across all age groups, clients in their 50s and 60s are actually the most active. We see them using the portal nearly twice as often as individuals in their 20s and 30s.
The pandemic has played a role here, with many of us doing far more online now than we did pre-Covid. Data from Age UK found that following the initial lockdown in 2020, 45% of 52 to 64-year-olds were using the internet more, as were 41% of 60 to 74-year-old[4]. However, the crisis has simply accelerated change that was already happening. The latest research into internet use, published by the Office for National Statistics in 2019, revealed that the generation gap had narrowed considerably even then. In 2011, 75% of those aged between 55 and 64s and 52% of the 65 to 74s were regular internet users, by 2019, this had risen to 98% and 83% respectively[5].
Clearly the trend towards online was in existence pre-Covid, but the pandemic has increased our comfort levels and created an expectation that businesses from all industries will provide a strong digital offering to augment their traditional proposition. Whatever your customer base looks like currently, your clients will increasingly expect you to offer join-up systems that allow them to access information and advice about their finances in the way that best suits them.
Clients will long recognise the benefits of traditional holistic financial advice, but by adopting technology to improve efficiency and reduce costs without compromising quality or depth of service.
[1] https://www.fca.org.uk/publication/corporate/evaluation-of-the-impact-of-the-rdr-and-famr.pdf
[2] https://adviser.royallondon.com/pensions/viewpoint/2020/january/putting-a-number-on-the-value-of-financial-advice/
[3] https://www.ftadviser.com/your-industry/2019/08/07/drop-in-advisers-accepting-100k-clients/
[4] Age UK, Digital inclusion and older people – how have things changed in a Covid-19 world?, 03/21
[5] https://www.ons.gov.uk/businessindustryandtrade/itandinternetindustry/bulletins/internetusers/2019
