Why mass advice propositions need a personal touch

By AdviceBridge

Over the past few years, much has been said about how the industry can extend financial advice to the mass market.

Emerging technologies have enabled firms to develop mass advice or guidance propositions, but these have so far lacked a personal touch.

Many large firms, such as pension companies, are concerned about the regulatory risk of straying into personalised advice and therefore tend to take a conservative stance towards guidance tools. Some smaller firms fear that offering personalised guidance would make it harder to differentiate their full advice product.

With people’s finances increasingly complex in nature, receiving personalised advice or guidance is more important than ever. Financial advice isn’t right for everyone, so it’s clear there needs to be a third way.

Shrinking the advice gap requires a multi-faceted approach

Emerging technologies are opening up opportunities for the development of cost-effective advice solutions for the mass market. But, as a report by the Personal Finance Society points out, regulatory uncertainty is suppressing supply and deterring market participants from fully embracing this opportunity.

The advice sector works well for wealthier consumers but, in general, it no longer supports different demographics or consumers with more straightforward needs.

Financial advisers often have a large back book of legacy clients, many of whom may have an advice need. Yet it’s simply uneconomical for advisers to offer a full financial planning service to these clients.

Guidance in its current form isn’t the answer

Financial guidance, in its current form, is unlikely to be sufficient for many consumers. Since the introduction of pension freedoms, consumers must make complex decisions about their retirement. What’s right for one person won’t necessarily be right for another.

To ensure a consumer makes the right decisions about their pensions and investments, there needs to be a thorough fact finding process so that a full understanding of their entire financial picture is formed.

Digitisation doesn’t mean automation

The digitisation of advice doesn’t have to mean the automation of advice.

A global survey of 33,000 consumers by Accenture found that there have been significant changes in the ways that customers prefer to interact with financial advisers, and that the industry is primed for disruption by emerging digital technologies.

However, it also found that those looking for financial guidance want more than just shiny new tech.

Almost three-quarters of respondents indicated a desire to receive personalised money advice and planning that was relevant to their particular stage of life, such as getting married, buying a home, setting money aside for children, and preparing for retirement.

Personalised tech offering

Speaking at a PIMFA forum last year, Ian Woodhouse, Head of Strategy and Change at management consultancy Orbium, urged financial advisers to embrace evolving technologies to offer clients more personalised services.

Woodhouse was quoted in FTAdviser as saying the advice market was beginning to move away from investment advice to offer broader advice.

“Going forward advisers need to learn how to make digital personal,” he added.

He also said that if advisers were able to use technology to personalise their offer to clients then they will end up with clients who are a lot more engaged.

“Firms that will succeed will develop and enable their advisers to enhance their communications and interaction capabilities,” he said.

How AdviceBridge can help

AdviceBridge has developed a retirement planning tool for financial planners which enables them to provide digitalised, yet personalised, advice to clients.

The white-label app gathers personal and financial information from the client and then shows what they need to consider when planning for retirement. It calculates how much money the client is likely to have in retirement and shows ways of saving and investing more efficiently.

The app enables financial planners to offer bespoke advice to every client – even those smaller, legacy clients to whom providing advice has previously been inefficient. In turn, advisers can open up new advice opportunities, expand their business, and grow profits.

Get in touch

If you want to find out how AdviceBridge can help you grow your business, please get in touch. Email hello@advicebridge.com or call us on 020 3925 3850. You can also visit our website at www.advicebridge.com to book a quick demo with our friendly team.