There has been a seismic technological and regulatory change over the past decade that has brought retail investors out of the fringes and into the spotlight, where they belong.
More than once in our history has the passing of a decade delivered real, noteworthy change.
If dinosaurs could speak after that city-sized asteroid hit the Yucatán Peninsula… the Britons of 1066 may have had a few choice words about being overpowered by the ex-Viking Normans… and what about the jump from humble horses and carts to mass-market automobiles when Henry Ford launched his Model T on the world in 1908?
Fast forward to late 2022/early 2023 and it is the turn of the financial services sector and professional advice arena to reflect on a memorable 10 years.
We may not have had to contend with asteroids, but we have faced the downside of Brexit, political instability, a pandemic, extreme market volatility and now the return of high inflation.
However, major regulatory changes (most notably pension freedoms), increasing demand for investment transparency and access to information, and – not least – giant leaps in wealth tech support for advice practitioners have all contributed to upgrading the landscape of retail investing.
In general, investors now have a greater presence in the advice and investment process than ever before.
That enables them to be more engaged, which, in turn, fosters a greater likelihood of good outcomes. Consumer duty aside, that is why we all turn up to work every day.
World lacked transparency and trust
Ten years ago, consumers predominantly accessed investments via brokers or wealth managers. Employee pensions were provided without much choice or visibility. Transactions and review processes were paper driven.
Although online access was available in some cases, the majority of investors were not engaging digitally with their investments. Access to market information and research was limited.
Trust and transparency were damaged further by scandals caused by a few bad actors, which added a negative sheen to consumer investments.
Even today some consumers remain wary of seeking professional advice owing to the fallout. This does a disservice to the vast majority of firms, which have acted beyond reproach, building their businesses around client needs and interests.
All in all, a lack of transparency, question marks over advice and product quality and the inability to justify fees meant things had to change.
The government and regulatory bodies acted to protect consumers against being parted from their money through insufficient focus on their best interests as well as outright unsavoury practices from a small but destructive minority.
Going in the right direction
Post-financial crisis, regulation started taking a more solid shape and spread across the sector. The retail distribution review specifically came into effect to improve transparency and the quality of advice.
The onus to justify fees and demonstrate the suitability of advice came into sharp focus throughout. At this point, technology offered an opportunity worth exploring to achieve scale and efficiency in resolving the pressures on advice providers.