The digital transformation of Financial Advice


Asin many other industries, automation is taking hold and it is accompanied by its share of critics who perceive a threat to the existing order of service.

What these critics may be failing to consider is that the existing offering has failed to keep up with rapidly changing consumer demands. The digital transformation is indeed a disruption: but that is not such a bad thing. In the case of Financial Advice: adopting technology is a necessity to any business that wishes to still exist in 20 years (maybe even 10).

Back in March, the deputy governor of the Bank of England Dave Ramsden predicted an ‘Uber moment’ on the horizon for Financial Services. The bank is even launching a FinTech hub to support this digital development.

Following a meteoric rise in popularity (and to a net worth of $72 billion) a new word entered our vocabulary: Uberfication. Hotshot hacks and fashionable futurists were delighted with the phrase: but only luddites would attribute it solely to the app’s functionality. ‘Uberfication’ is not simply a gold standard for a piece of technology; it is the emblem for fundamental expectations every iPhone user hallows as their constitutional rights.

It is also worth noting that a 2017 study found that the average Uber driver earned more than an average Taxi drivers’ salary. Adi Gaskell for Forbes magazine attributes this “largely due to the fact that the Uber software allows drivers to better optimise their time and services.”

Uber has its flaws — of course. But the lightning-fast journey from ‘New Disrupter On The Scene’ to ‘What Did We Ever Do Before’ is quite incredible and comes with a lesson: once technology innovates a more efficient way of doing things, it’s very hard for consumers to turn back.

Consumers have come to expect that things can be direct, transparent and easy. For advisers to offer clients that service, its imperative that they have an intuitive technology offering in order to attract clients.

In many ways, advisers in the age of digital transformation have more potential clients than ever — if they play their cards right when it comes to equipping themselves. A PriceWaterhouseCooper report on the likely impact of new financial technology found that 75% of firms surveyed believed that the overall effect would be more focus on the customer.

Since we first asked Jeeves (June 1996) we’ve had unprecedented access to knowledge. The age of information is one in which potential investors can now educate themselves on financial markets and services. Due to this incredible access, the number of people with the confidence to become investors has never been higher — but advisers need to be able to reach and accomodate them.

Advisers today need to keep up to date with the market — something made easier with social media. Having an active social media presence won’t hurt in finding potential clients and touting services either.

The rise of the very self-assured client presents another task for the modern adviser: winning them over. The demand for bespoke, personalised advice has never been higher: and any innovations that drive up both appetite for, and recognition of, quality should be welcomed in any industry.

It is only by delegating some fundamentals of the day-to-day operations of an advice firm to technology that smaller businesses can offer clients the same tailored experience formerly the preserve of the ‘Big Boy’ firms.

Consider the testimonial of Matthew Ellis, head of OneFamily advice, who chose to implement Focus Solutions’ practice management software, now:advise, in order to “create a bespoke customer journey. By working with Focus we were able to develop a proposition unique to us that suited our customers’ needs based on its out-of-the-box solution.”

Technological tools — like now:advise — reduce the cost of advice while driving the value — face-to-face, made-to-measure, advice — upwards.

More potential clients also means a more diverse range of investment portfolios. Smaller entry portfolios, such as those of millennials who are facing a very different financial landscape to generations before them but many of the same savings goals, can be accommodated if a firm has an adequate technology offering that allows them to adjust fees accordingly. They are also all digital natives.

By efficiently relegating some tasks to automation, adviser’s can pinpoint where they add the most value to their clientele. Value-adding activities like goals-based investing — something that an excellent cashflow modeller like now:plan helps facilitate — empowers both adviser and client. With Open Banking, people will be able to see all their financial affairs in one place: a huge opportunity for an adviser to branch into detailed lifestyle-planning.

The roll out of this technology in its infancy has already presented financial advisers with key insights. We know that customers value transparency and being able to see their invested assets. We have also been assured that the capabilities of automation do not satisfy the customer’s need for communication and trust with their adviser.

The Uber moment is on the horizon, and modern advisers should hitch a ride.