“Bionic advice” combining human and automated services has “cracked the advice gap”, according to Kay Ingram, ahead of national adviser LEBC’s full UK roll-out of its new system next year.
The group’s director of individual savings and investments said clients using its service fill in an online questionnaire pin-pointing their specific issues, before being handed over to a financial adviser who will focus on those areas.
Standard office hours are replaced by an ‘out of hours’ service allowing clients who want to deal with their financial affairs at 3pm on a Saturday afternoon to log on and contact their ‘on-call’ adviser working from home, Ms Ingram said.
LEBC, which has 14 branches across the UK and around 80 regulated individuals, is heralding the development as the key to reaching those who could benefit from advice but can’t afford the high-end face-to-face services many advisers now focus on.
“What we are working on now is what we call bionic advice,” Ms Ingram said. “We think we have cracked this advice gap.”
Interest in automated or ‘robo-advice’ has been growing across the industry, as firms try to reconnect with the mass market many abandoned in the wake of the commission ban brought in by the Retail Distribution Review, as lower value clients became less profitable or were unwilling to pay fees.
Last month the FCA and HM Treasury published the final report of the Financial Advice Market Review to tackle this “advice gap”.
The report recommended increased use of mass-market automated advice.
Providers like LV and Scottish Widows, direct-to-consumer platforms such as Nutmeg, and financial advice firms such as Lighthouse and Bellpenny are all considering moves into the market.
But LEBC looks set to be the first among the large advice firms to take the plunge.
The national IFA has embarked on an adviser recruitment drive to meet expected demand for the new service as well as a rise in clients seeking help with the most complex areas of their finances.
“We are recruiting advisers, paraplanners and client support staff - there has been a huge increase in demand for advice, particularly in more complex areas.
LEBC already gives advice remotely, but Ms Ingram said “bionic advice” is more about helping clients start on their journey themselves.
“Some people may not feel they want to pay the fees we charge for full-on advice, but they might want some help with their planning, so they will be able to log onto the portal and fill out some questionnaires, which will be used to assess which areas it is important they focus on.”
The soft launch of the service is planned for the autumn, and should be fully up and running by this time next year.
Post-RDR, as well as a general move among advisers’ to service higher-net-worth clients, the mass market has been hit by a decline in the number of financial advisers offering professional advice from around 26,000 in 2011 to 24,000 in 2014, according to FCA figures.
Meanwhile the proportion of retail investment products - including pensions and investments - sold without advice has increased from around 40 per cent in 2011 to 2012 to around two thirds in 2014 to 2015.
In January, LEBC Group reported operating profits up by two-thirds to £1.84m at the start of October 2015, from £1.10m at the end of September 2014.
Turnover at the national IFA, pensions and employee benefits consultancy also increased 22 per cent to £15m.
The group is an appointed representative of TenetConnect, with 15 branch locations spread throughout the UK, including in Birmingham, Bristol, Cardiff, Edinburgh, Leeds, Leicester, London, Manchester and Reading.
Adviser view
Simon Torry, a chartered financial planner with Essex-based SRC Wealth Management, said: “In my experience advice is interactive so asking clients to fill out a form and send it in misses a huge chunk of background information and it is only with face-to-face interaction, or over the phone, that you can get an understanding of what someone’s situation is.
“From my point of view we are coming at this from the wrong angle. The FCA has overregulated the advice market and we are now trying to find solutions to a problem created by that.”
