Tim Sargisson: What does digitalisation look like for advisory practices?

There’s a revolution going on in financial services technology. The scale of the revolution is extraordinary with investment in fintech topping as much as $15 billion in 2016*. Much of the technology will have very particular functionality and claim to be the answer to solving all types of adviser process and customer service problems. Much of the software is excellent. Likewise, much of the software can be expensive!

There could be a tendency to be a bit blinded by the shiny new toys, but in my view, it pays to be more objective about your choices and take on board these key considerations;

Consideration 1: Do you have a robust customer service proposition in place?

This is important, because if you don’t have a vision as to the type of advice business you want to be, you’ll be hard pressed to judge which technology is right for you.

Consideration 2: Does the tech match your customer service proposition?

Many software purchasing decisions are based on the functionality of the kit and not necessarily the needs of the business. It is important that the technological tail does not wag the business dog.

Consideration 3: What is/are the right tech solutions?

The scope of your requirement for technology may have something to do with the practicalities of your business (the type of advice you provide, to whom, and over what specific areas), and the depth of your ambitions.

You could decide on a solution tailored to your tightly defined operational needs. You could equally decide on a more expansive approach to information storage, data sharing and client engagement by transitioning your business onto the Cloud.

Next, we consider what a forward-thinking solution might look like for a modern digitally-enabled advisory business.

One best practice adviser firm known to me suggests to clients that they should tell them the ‘big number (£) they wish to retire on’.

The firm then considers it their job to ‘do all they can to meet, or get as close to that number as is possible’. It’s a compelling single minded wealth management proposition, and it drives the conversation at every meeting.

This firm’s tech will need to satisfy a number of requirements to deliver on this promise;

• All pensions data convenient and accessible.
• Real-time valuations.
• Fund goal and projections against that goal.
• Portfolio data which shows the likelihood of the portfolio delivering a value to support an income and capital requirements in retirement.
• Automatic re-balancing to keep the portfolio on-track.
• Modelling to show different ways the fund(s) will be used with blends of drawdown and perhaps annuity.
• And more…

What else could a digitally enabled advisory business do?

It doesn’t end there, because digital technology offers so many other possibilities for client engagement.

The firm could develop an app for example, with a core function to track the status of the portfolio’s value now vs ‘the number they wish to retire on’. It could also have supporting features such as commentary and alerts relating to market conditions having an impact – for good and bad – on that final number.

The annual review doesn’t have to be face-to-face any more. Digital video and audio could play a new and engaging role. Eviid, for example provide technology to record multi-way conversations in real time on mobile or tablet. The recorded file is saved into an accessible tamper-proof digital vault and reviewed as documented truth by an adviser or a paraplanner tasked with formulating any new advice requirements.

I also believe Compliance Directors would be big fans of this approach, as they would be able to witness the conversation chapter and verse, as well as see the client’s body language – potentially lowering conduct risk and positively impacting on PII premiums.

Digital video and audio could also be a creative and personalised way of delivering a conventional review pack.

Then there’s the overhead associated with data collection particularly at the fact-finding stage. Much of this is still done using a woefully inefficient pen, paper, re-key and send to back office or platform process. I’ve seen digi-pens used directly onto paper or in conjunction with tablets to speed up this process and cut costs by converting handwriting into xml data and firing the data straight to the back office. This system can also be used to populate client record systems.

Technology is also paving the way for new types of financial services provision, which can be seen as complementary to, or as an extension to an adviser’s service proposition. Some advisers are choosing Robo–advice technology as a way of giving in inaccessible clients the opportunity to get access to advice at a more affordable level.

Extraordinarily, Robo-advice advisers are projected to manage as much as $7 trillion in global assets by 2020*

Then there’s the all-important back office systems, the backbone of a modern digitally enabled business, complete with seamless straight through processing (STP) connectivity between back office, front end and the wealth management platform.

Depending on your client proposition, this would also tie into your client facing website, so you can offer clients access to their portfolios and other product holdings. They would also be able to see all other assets they own and check goal progress.

Client communication gets a whole lot more personal

Keeping in touch with clients gets a whole lot smarter too. Out go generic bulk emails and one size fits all newsletters. In comes the opportunity to talk to clients in a highly-personalised way.

Investing in the right CRM software can help advisers’ segment clients by a number of characteristics and send tailored, subject specific, timely and relevant information or promotions via email and social media.

CRM systems are now sophisticated enough to be able to send emails sequentially as a consequence to timed alerts, or client responses. If we turn to our best practice adviser firm scenario, this could mean a series of update communications relating to the progress towards that ‘Big number’.

And remember, intelligent use of links in emails and social media will direct existing and potential clients back to your company website.

Keeping clients informed

Nowadays people find their financial information from a multitude of sources – TV, newspapers, advertised websites etc. As useful as this information is it tends to be generic and not necessarily specific to a client’s actual needs.

Advisers can ‘own’ the conversation with clients by creating their own branded content. Emails are a sure bet, as are guides hosted on your website, perhaps provided in PDF form as an alternative. Videos are also a good idea and often quick to deploy particularly if reacting to changing market events, for example.

An advisers’ value to a client is to use their knowledge, experience and talent to help meet their financial aims and objectives – to maximise the gains, and minimise the risk. By adding and intelligently using technology to streamline these processes and improve engagement advisers will be set fair for long-term and profitable relationships with their clients.

*Source: Business Insider UK 14.12.2016