Financial advisers play the role of trusted friend

Trying to decide what to watch can be a mind-boggling experience: do I want to watch the newest period drama? Or should I tune into the new Sir David Attenborough documentary?

It’s a familiar feeling for many and, after flicking through channels, we frequently proclaim ‘there is nothing on’.

Now, imagine a situation where you sit in front of the TV armed with a recommendation from a friend. They mentioned that the new Sir David Attenborough series is amazing so you are content that someone you trust has helped you decide. 

When searching for a loan on aggregator sites, the average customer is given more than 20 different options, ranging from high-street banks and building societies, to smaller loan providers and challenger banks.

With new entrants coming to the market, the amount of choice in the personal finance space increases – and so does the need for clarity.

When deciding on personal finance, it’s easy for customers to feel overwhelmed with choice, causing anxiety, confusion and delay. 

In the personal finance market, the role of the trusted friend has traditionally been filled by financial advisers.

Armed with expert knowledge and an understanding of the market, they help customers narrow the choice and help understand what is available to them.

Guidance can be an important counsel to customers, especially when understanding various scenarios and loans available for each circumstance. It also helps to narrow down the number of choices and gives reassurance and clarity that customers are making the right financial decision. 

With new entrants coming to the market, the amount of choice in the personal finance space increases – and so does the need for clarity.

For those without access to trusted financial guidance, the developments of Artificial Intelligence and machine learning provide a life-affirming opportunity to access tailored financial products which breaks down the barriers between advice, guidance and technology. 

Similarly, in the broker market, recent innovations use sophisticated systems to present customers only with eligible options through machine learning. With the ability to learn endless ‘rules’ that can be changed almost immediately, systems are now capable of learning the right outcomes and options for individuals.

The developments in fintech also make it clearer for customers, by presenting the possibilities and information in a concise way – but there is still a long way to go. 

As fintech helps decision-making platforms capable of advising customers on the best options available to them in the market, the importance of ‘human touch’ should not be forgotten.

Technology works best when it is helping to facilitate human interaction and trust. It helps narrow the choice and provide clarity for customers. However, for many, one-to-one conversation still forms an integral part of the process of making important financial decisions.

We believe that clarity – and not simply lots of choice – is key to making well-informed decisions.

The Freedom Finance team helps explain the options to customers and empowers them to take control over their finances. Removing the options that customers might not be eligible for is the first step. 

Additionally, the recent introduction of Open Banking presents an opportunity to give customers even better digital journeys.

As well as improving timing and efficiency, it can help finance providers better understand customers and respond to certain demands or needs. However, nourishing an element of trust is essential to grow APIs and build the bigger picture around a customer’s profile. 

Overall, the number of options is essential to all personal finance decisions.

Too many can cause paralysis, with customers flummoxed by choice. The growing market and number of providers serving customers is positive, but not all providers will offer the best options for an individual.

The future of personal finance is exciting, with some great new ideas coming to market, particularly in the fintech space.

However, to get maximum benefit for consumers, both traditional and challenger companies need to focus more on providing clarity rather than just providing choice.  

Marketplace platforms will continue to evolve and embrace AI to enhance this further.

Customers in the future should certainly expect to be presented with the right selection of products tailored to their individual needs.

They should also feel supported through a one-to-one pre9 and post-sale process, informing on the buying decision.

By increasing the focus on clarity, the consumer and the industry will undoubtedly be better served.

Brian Brodie is group chief executive of Freedom Finance