Investments  

Ten FinTech reasons why the advice gap will close

I don’t think I have ever seen the industry so energised around grasping the opportunities that financial services technology represents and advice firms so interested in adopting technology that works for them. 

There's lots of work to do but in the medium to long term I have no doubt the landscape will look very different - and not for the reasons you might think! 

Here are 10 reasons FinTech will help close the advice gap for the country and for your own practice. In no particular order…

1. Auto enrolment. While starting with a low level of financial commitment the behavioral nudge (opt out rather than in) enabled by new systems has got millions saving with very low opt out levels.

The question now is all about how to get the savings levels up. Over time these customers will build significant pots and will need advice on how best to access them.

2. Pensions dashboard. The approach is right; open standards will allow providers, FinTech companies, advice firms and others to access customer pension information securely and reliably.

Having built our own portfolio aggregation and valuation capability for the retail market over the years we know how difficult this is, but also how profound the benefits to the customer can be. Accessing information on corporate pensions will be a huge benefit to advisers too when this is ready.

The more accurate and holistic the information available, the better the guidance and advice that you can provide.

3. Automated advice will become commonplace, driven in part by dynamic FinTech companies but also incumbents determined to innovate and a supportive Regulator (see Project Innovate). The successful ones will use a hybrid model that blends the best of digital with face to face or phone based advice.

Our own AccessAdvice initiative will help advice firms open up access to their own advice digitally next year. Extending your advice (or parts of it) to clients with smaller balances; the next generation of younger clients for example will build longer term value in your own business 

4. Financial Advice Market Review (FAMR). The Treasury remains committed to progressing FAMR's recommendations. I've said before that if they are fully implemented the advice landscape will change - and rapidly.

Clarifying the boundary on guidance so that risk-based choices can be assessed without the regulatory burden of a personal recommendation will clearly be welcomed by many firms and institutions. Clarifying the suitability requirements for a streamlined process will be equally impactful.

Many firms feel they need to undertake a holistic process when actually the client only wants or needs a more focused one. Focused processes can be more efficient and profitable. 

5. Pension Freedoms. These have led all the big providers to gear up their call centres and up their game in terms of information and guidance online. They now have the capability to support very large numbers of customers and this will be a powerful channel particularly for those with simpler needs.