The future of financial advice

Nick Eatock, Intelliflo

By Nick Eatock (pictured), CEO of Intelliflo – The start of a new year always feels like a good time to think about the future and where we’re headed. With that in mind, here are my thoughts on the technology themes that will impact financial advice in the next few years.

Better use of technology

An important trend that has emerged from the Covid-19 pandemic is that people, both personally and professionally, are making better use of technology they already own. Lots of us have probably used WhatsApp for group messaging for a while, but I for one only started using its video functionality to keep in touch with friends and colleagues while we were restricted from meeting face to face.

The same is true of the advice firms’ systems. Our adviser poll in the early days of the pandemic found that two thirds (66 per cent) of firms had already seen an improvement in employee adoption of available technology, while 50 per cent had seen an improvement in client adoption. Adviser Office usage stats back this up, with use of digital signatures tool DocuSign 16 times higher and of Glia, the online meeting and co-browsing software, 95 times higher between March and September 2020 than the same period last year.
 
The financial benefits to advice firms of better use of technology are clear from our e-Adviser Index. Those who adopt it most outperform everyone else across number of clients, assets under advice and total and recurring revenue.
 
Greater system integrations

Of course, for maximum efficiency, you don’t just need to make best use of one system, you need to optimise them all. Lockdown really brought home to advice firms and financial services providers the difficulty of having multiple systems that don’t speak to each other. When you’re working in the office, using paper, manual workarounds and rekeying information is monotonous, but with time you can achieve what you want to do. When you’re working from home, you might not have the paperwork to hand, or be able to access all the systems you need, and lack of integration moves from being a pain, to being really, really difficult.
 
As a result of the pandemic, we’ve already seen the industry shift away from paper to digital processes. We think the next step is to create deeper and richer connections through APIs, so that eventually advisors will be able to pick and choose the best back office systems, platforms, investment managers and other tools for their business needs and knit them together to create a bespoke, fully integrated solution. Our research into Centralised Investment Propositions (CIPs) with the lang cat back in May 2020, found that 74% of advice firms are seeking deeper integration between their back-office system, platforms and research tools.
 
Growth of client dashboards

As part of the CIPs research, we also found that 71% of advice firms had plans to adopt improved client portal for investment monitoring and review. Adviser interest in client portals is borne out by the huge growth we’ve seen in use of our Personal Finance Portal (PFP), with usage increasing three-fold between March and September 2020, compared to the same period last year.
 
Of course, much of this growth has been driven by the impact Covid-19 has had on advisers’ ability to communicate with their clients over the last nine months. Client portals have proved essential to advisers trying to implement their clients’ financial plans during the pandemic and 1,600 firms now accessing our PFP daily and we think that is set to continue because they improve the efficiency of processes, especially things like client authorisations and costs and charges disclosure.
 
However, alongside the benefits to advisers, we see enormous advantages to clients from having access to a portal which can be used as their financial dashboard. Dashboards have the potential to create engagement between clients and their finances, providing transparency over information and a place to see all their accounts and products in one place at any time.
 
Expansion of open finance

Helping to drive the shift towards client dashboards, is the move towards greater sharing of information between financial organisations. Open banking was the first step in the process, giving individuals easier access to information about their bank accounts and credit cards, with the option to share that data with their adviser.
 
Financial advisers are already in a strong position to make optimal use of these details to inform the advice process, and new services providing access to ever richer information are now coming to market. As different types of products are added through initiatives like the Pensions Dashboard, clients and their advisers will have a very detailed picture of their financial situation to feed into their financial plan and help achieve their short- and long-term goals.
 
Financial advice will long be centred around people – the client and their human adviser. But the importance of technology in supporting the process to ensure efficiency, transparency and access alongside compliance and suitability is set to grow.
 

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