The past year has been “transformational” in terms of how advisers think about technology, according to Protection Guru founder, Ian McKenna.
McKenna attributed this statement to, among other factors, the emergence of ChatGPT which he described as a “huge catalyst” and a “major shock” to many in the industry.
Recalling an event from the start of 2023, McKenna stated you could “cut the atmosphere with a knife” when Phil Calvert gave an "outstanding demonstration" of the potential of ChatGPT to a room of advisers.
“Historically, most advisers have felt their personal relationship with customers gave them an unparalleled advantage over technology-based distribution,” he explained.
However, McKenna cautioned that “we now know the road to artificial intelligence adoption will not be so simple” with “major issues” around privacy, data security and hallucinations to be addressed.
Despite these issues, McKenna also highlighted there are “enormous efficiency savings” which AI can make a reality.
Providers
Another major change in 2023, according to McKenna, was the extent that advisers are “losing patience with providers and other financial services platforms” who “contemptuously ignore letters of authority”.
He reported the level of support amongst advisers for embracing the Origo letter of authority initiative makes it “perfectly possible” to automate the delivery of information needed using the extensive Criterion standards.
As a result, he advised that the Financial Conduct Authority should “be paying close attention to any organisation” that has not connected their back-office systems to this service.
Consumer duty
McKenna also stated that no summary of 2023 could be considered complete without reference to consumer duty which caused a “major change in what is considered best practice”.
He explained that, under consumer duty rules, the FCA is mandating that value for money should be the primary driver when making recommendations.
Looking at the data from the Protection Guru Pro service, McKenna said that “we see that when an adviser starts an advice process by focusing on quality, a far wider range of providers are recommended”.
As a result of this, McKenna stated that advisers now need a “very different range of tools” to meet these new responsibilities and that pure price only portals “no longer fully reflect regulatory requirements”.
McKenna additionally pointed out there are several services that offer the detailed quality data advisers need in addition to prices.
“Defaqto have offered protection data in their service for decades and also provide such information into UnderwriteMe.
“iPipeline have an integrated product feature report and Protection Guru Pro is a stand-alone service.”
tom.dunstan@ft.com
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