The mobile internet, like the now sepia-tinted internet before it, is decimating business and fee models across every major sector.
Financial services is no exception and, as anyone reading this article will know, the way financial advice is being delivered is evolving by the day.
And as far as I am concerned, it has to evolve. Intermediaries with long-term growth plans have no choice but to adapt themselves to the way tech-savvy millennials behave and interact online – and mobile is pivotal to this.
The most forward-thinking advisers will even have one eye on Gen Z, the pure digital natives born from 2000 onwards whose lives are primarily mobile.
Against this backdrop, it would be fascinating to know what percentage of IFAs are evolving their advice and fee models to accommodate today’s younger, mobile-first investors? After all, this is a huge opportunity: millennials currently have very few options for getting real financial advice (which may explain why robo-platforms are in the ascendancy).
But for IFAs, adapting their advice and fee models to millennials isn’t necessarily easy. For starters, most millennials will have modest rather than significant assets. It’s fair to say that four figure portfolios will be far more common than six figure ones. That in itself will be a challenge for many IFA firms.
At the same time, the average millennial will be acutely aware of the implicit cost efficiencies of the internet and simply won’t pay the fees charged by more traditional IFAs, especially when those fees are not clearly displayed online — in their minds, a major red flag.
This new breed of investor will demand transparency not just in relation to fees but service levels and quality of advice, too.
Millennials are used to social platforms such as Uber, where taxi drivers are rated in real-time, or Airbnb, where hosts are reviewed online to ensure guests go in eyes wide open.
So how can IFAs start forming a relationship with millennials in a way that’s commercially viable? We believe the entire delivery method of financial advice needs to transform itself radically and increasingly mirror the experience of an Uber or Airbnb rather than that of a traditional advisory firm.
For us, the successful financial advice models of tomorrow will comprise, among other things:
• Mobile-first technology and apps that service those ‘on-the-go’ millennials who want to chat, video chat or message on their phones – and access sensitive portfolio information effortlessly through fingerprint ID.
• Real-time, independent and readily available adviser ratings and reviews — millennials trust other real-world users, not awkward and manufactured onsite testimonials.
• Flat and fully transparent (as opposed to opaque and tailored) fee structures
• Zero commission online share and ETF fund trading, as per US models