How can an industry that is behind the curve on technology progressively move to an environment where it is offering the best possible proposition to clients?
This is a question that is high on the agenda for Richard Howells, director of insurance, wealth, life and pensions UK and Ireland at Experian.
Mr Howells has spent many years working with financial advisers, first as a chief executive at Berkeley Independent Advisers, then as managing director of strategy development at Bankhall, before taking on a role as intermediary sales director at Zurich Insurance.
With experience in both the distribution and manufacturing side of the financial advice industry under his belt, Mr Howells says this has given him a solid grounding in terms of how clients engage with the concept of financial advice.
Transparency
In his current role at Experian, Mr Howells is attempting to address that by engaging with the life and pensions industry and helping companies develop their digital engagement propositions.
He says: “If we made communication simpler, right down to the language we use, we would give more clarity to people on where they are so that they don’t make poor assumptions – this is probably the biggest ticket thing that we collectively, as a market, could work on.”
He adds: “You might not agree with it and you might not like it, but it’s happening.
“[Advice companies have to] either accept there will be other propositions that start talking to your clients, or, create some kind of digital proposition yourself to service their changing needs. It’s difficult to go [in the] middle ground, because you’ll just end up doing several things badly.”
If the industry is serious about closing the nationwide savings gap, Mr Howells says the pensions dashboard has to happen, but emphasises it must be complete. Otherwise, it risks losing half of its audience.
Pension providers and pension schemes will also have to be responsible for making sure the data they input into the dashboard is accurate, and that nothing is left out.
“When you look at other successful initiatives, like auto-enrolment, the dashboard will accelerate that success,” he says. “But we need to create more transparency around what a consumer has, to enable them to say, ‘This looks like a good deal’, or ‘Why do I have five pensions?’.”
But the government go-ahead for the dashboard – which the chancellor promised in his Autumn Budget would receive funding after a period of uncertainty – is only the first step in creating an environment where consumers can take ownership of their finances. “It’s about breaking down the jargon,” Mr Howells says.
Digital disruption
Turning to open banking, Mr Howells says this is an unstoppable train – one whereby consumers are being empowered by their data. He says: “General data protection regulation has brought that to life as well. What we’re starting to see now are new propositions being built based upon open data, which will surely disrupt all markets, and very much so the life and pensions market.”
Part of his role at Experian involves talking to market players about how emerging open data systems might affect their positions.
He says: “When something comes along that starts to operate as the primary financial relationship with the consumer, where does that leave you? If they’re being guided and influenced by an app, you have to ask: is that a good thing or a bad thing for your business? For a lot of companies it’s a worry.
All firms, big and small, have the ability to create a digital relationship with potential clients.Richard Howells“In most financial advice businesses, roughly 25 per cent of the customer base will never go anywhere else. But there is still a large proportion of customers who aren’t as engaged as that top 25 per cent – these are the ones who are more likely to be swayed by new digital propositions.”
However, instead of seeing the open data environment as a threat to business, he says the industry should use this an opportunity to digitalise. “This does not mean it’s just a playground for large firms. All firms, big and small, have the ability to create a digital relationship with potential clients,” he reasons.
“And advisory firms are in a particularly strong position, because of the depth of relationship they’ve got – at least with a small percentage of their customer base – already.
“If you’re a fund manager or a provider it’s a tougher job and probably more urgent.”
Data management
Despite recent improvements and innovations when it comes to data being stored by financial advice providers, there is still work to be done.
“People move or change names, and their first thought isn’t to update their pension provider, and over time this can lead to them losing assets they are owed,” Mr Howells acknowledges.
For this reason, Experian runs the Unclaimed Assets Register, which helps reunite people with their lost financial assets and providers.
“We know that pension scams are on the increase, particularly post freedom and choice, so how do we introduce technology solutions which make sure the money that’s being paid out is being paid out to the right people?”
For Mr Howells, the answer lies in good data management, improved innovation and digital automation. “The changes can only benefit the consumer – we have to take them with us.”
Victoria Ticha is a features writer at FTAdviser and Financial Adviser
