How to look good with fintech

Ben Goss

Ben Goss

Since founding Distribution Technology in 2003 we have believed the combination of financial planning and technology is critical to reducing the cost and risk of advice delivery while also increasing access to it.

FinTech is on everybody’s minds at the moment and the government, media and FCA are all talking about how it can help close the advice gap.

FinTech will also play an increasingly important role in allowing advisers to profitably expand and grow their business while future proofing.

To look good with FinTech there are four things that we at DT believe really matter:

  • As an investment adviser your investment proposition and the investment process that delivers it is central to your business.
  • That proposition needs to be supported by accurate, high quality investment profiling, targeting and research.
  • The adviser’s proposition needs to be supported by accurate and timely data. Without data you can’t give quality advice and ongoing servicing. So integrations are critical to looking good too.
  • Once bedrock of a strong asset and risk model plus integration is in place, then you are able to provide great technology that the customer sees, the apps. A slick, engaging and streamlined service.

Tools such as Dynamic Planner are proving popular. But there are fundamentals advisers must look out for if they are to look good.

It’s not just the technology, but the trust you are placing in anyone's asset and risk model.

We review the performance of our allocations on a quarterly basis and you can see their performance over the last 10 years. 

Consistency and integrity of outcomes allows advisers to confidently build risk based plans and portfolios which means they look good not just on day 1 but over the many years, perhaps even decades of a successful client relationship.

With the FCA’s Asset Management Market Study, it is clear that risk adjusted returns net of fees against a suitable benchmark will be an important means of investment selection going forward.

We believe that the ability to deliver these returns and to report on them against certain risk benchmarks will be a source of competitive advantage to advisers and will help them to look good to clients.

The fact that almost 50 per cent of recommendations –  over £1bn – into Dynamic Planner last year were into risk profiled or risk targeted investments demonstrates the beginning of this change. 

But not all is rosy in the garden. Something is brewing: You can’t open a paper without reading of a new start-up or robo-adviser intent on digitising the advice process and disrupting the industry.

The Treasury is consulting over the definition of advice and guidance and assuming they adopt the Mifid definition, which requires a personalised recommendation, many more providers, some with big brand names and big marketing budgets will start to offer online guidance.

We also read that there are five banks in the sandbox working on some form of digital advice.

On the other hand, traditional advice continues to be painted as the expensive and inaccessible option. Particularly the full service model which is lengthy and costly to deliver.

Is this really the choice though: a choice between ‘all digital’ or ‘all face to face?’ 

We don’t think so. Particularly when it comes to simpler or smaller cases, such as the children or friends of existing clients who don’t meet segmentation criteria yet because they are at an earlier stage in their wealth accumulation journey but where the adviser would like to start to build a profitable relationship.