PlatformJul 31 2019

How technology could change advisers’ relationship with clients

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How technology could change advisers’ relationship with clients

There’s a good chance that you are reading this – if indeed you’re reading it at all given it’s summer holiday season – on a tablet; possibly on a deckchair with a glass of something refreshing.

So in keeping with the time of year, let’s come away from big, heavy topics such as regulatory intervention, industrial-strength portfolio management, replatforming and all the rest of it, and think about something a little bit more pleasant.

In a recent survey – to which 116 firms responded – we asked how firms saw the interaction with clients changing with respect to technology in the next five years.

We were pretty encouraged by the findings. I don’t know if you know this, but advisers have a bit of a Luddite reputation in terms of your enthusiasm about adopting new technologies. You and I both understand that this is born of many long, painful technology projects.

So when we asked if you thought the industry would be more efficient in five years’ time, we could do nothing less than salute your indefatigability when you answered in the manner shown in Chart 1

You have to love a sector that has the optimism to believe that, after 20 or 30 years of technological frustration, the next wave will be the one that nails it. Or at least 70 per cent does. To be fair, that may be because a good 20 per cent of our respondents were paraplanners, and while we didn’t ask their age, I have a sneaking suspicion they are irritatingly young, intelligent, vibrant and full of hope; we can only hope that gets knocked out of them soon.

Things will hopefully get better, but our subject now is the interaction between adviser and client. 

Do it yourself

We all know that one of the biggest inefficiencies in the adviser back office is the need to record client details in multiple places – I’ve written before about the state of integrations in the sector and how far it has to come. 

One way to get past that is to invite clients to input their own details into one of the systems you use (most likely your financial planning/cash flow software, or your back office). This has the virtue of a) being less work for you, b) reducing errors because people do tend to spell their own names correctly (and if I had more space I could tell you about the number of times I’ve had letters to ‘Dear Mr Poison’), and c) marking out your territory that your service is mainly about financial planning and not admin.

The downside to all this is that a) you have to check the client’s work because it turns out sometimes they really can’t spell their own name, and b) there might be some pushback from clients who reason that they are paying in the region of £200 an hour, and frankly you can do the typing, not them.

There’s not much we can do about (a) apart from a radical overhaul of the educational system in the UK, although we’re ready to have a crack at that if asked. The second one is more interesting: we asked our esteemed panel if they thought clients would be more or less happy to input their own details in future – see Chart 2

It’s that 70 per cent figure again – and yes, those who thought things would get better are also mainly those who thought that this would improve, though not exclusively.

About 18 per cent thought clients would tell them to get lost, and a very interesting 12 per cent said that clients might be begging to self-serve their own information, but they would fight them off bravely.

I must admit, I’m with the 70 per cent here. I suspect most clients, if they understood that time not taken in data entry is time that’s available for stuff like financial planning, would be fine with typing their own data in. Serving our own information online has become a way of life for people of all ages, apart from perhaps those fully at the Abraham Jebediah Simpson II end of the age spectrum.

Ray of light

One firm I spoke to recently that is making this work right now is Niche IFA in Newport. Niche is an interesting business in lots of ways – it’s a fixed fee shop for a start – but what’s mainly interesting about it for our purposes is that its boss, Ray Adams, is also the boss of CashCalc, quickly becoming the most popular cash flow/financial planning tool in the country. 

It may not come as a galloping surprise to learn that Niche uses CashCalc; and every new client is asked to input their own details into the client details section. This then feeds the back office and customer relationship management, and this can then feed the platform(s) that Niche uses. 

Mr Adams and his team position this in just the way I describe above – that they want meetings to be productive, and the more time spent capturing basic details, the less time talking about interesting stuff, and the less it need cost the client. Fewer than 15 per cent of clients buck at this.

No one’s suggesting that a planner takes everything a client types in as gospel, but it’s a nice starting point to the relationship.

And while we’re getting clients to stare at screens, let’s talk about letting them interact with their hard-earned cash as the years go by. Not doing anything, you understand, no option for tweaking your carefully crafted portfolios by putting a big dollop of something unfortunate in there, just looking and learning.

When we asked how important advisers imagine clients think mobile apps would be in five years’ time, here’s what we found, see Chart 3

Here, the Captain Grumpies seem to take a back seat – about 90 per cent or so reckon that it’s important right through to very important. Yet I still know – and I bet you do too – many advisers who advocate keeping clients well away from seeing how much money they’ve got, where it is and how it’s doing.

This sometimes masquerades as behavioural coaching – the assumption that clients as a rule are quixotic, innumerate, don’t listen and are generally half-a-loaf. “But why should a client need to know if their value has gone up or down?” says the planner who takes this view. “They just have to ignore it and do what I tell them and it will all be fine. It’s time in the market not timing the market.” And so on.

There’s some truth in this – it is important to stop clients doing daft things, and sometimes they don’t listen, and it often does come good if you wait long enough. 

But in this day and age, to suggest that you engender the trust that will lead clients to not phone up when they see that the markets have got the jitters, or that Campbell down the golf club has got a fabulous opportunity and just needs an extra £20,000 to make it real, by divorcing the client from genuinely useful information, seems to be daft.

Good information, teamed with good planning, good process and good technology, must surely be the recipe for happy and healthy clients.

Mark Polson is principal of the Lang Cat