While face-to-face meetings remain a key and very important part of the adviser-client relationship, clients will demand the convenience of monitoring their financial circumstances individually, and from a single platform.
There are parallels with online banking – how many customers prefer to visit their bank branch, as opposed to sorting everything themselves on their phones and PCs? Not many.
Additionally, many of the direct to retail apps include an element of client education. It is a standard feature for savings apps to feature articles and blogs that answer frequent questions, and to explain how risk can be controlled using a variety of investments. Motivated clients will educate themselves.
Advisers would do well to compare some of the Financial Independence/Retire Early (FIRE) blogs to see how young investors are educating themselves and managing their own finances, while keeping costs very low.
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There are several instances in which fintech can be used by advisers, whether it be in back office, client risk profiling and cash flow modelling, investment research, client platforms, or services that can combine these elements together.
Fintech can be used to expedite the paperwork of financial advice so advisers can concentrate on the important parts of their client relationships. Ultimately these should enable the adviser to better meet client needs and the reduce costs of providing advice.
That is, they can incorporate the best parts of robo and human advice, to become a hybrid, cyborg-advice business.
But it is easy to underestimate the challenges that advisers face in terms of training, legacy IT systems and regulation requirements.
Staff need to be trained to understand and use new systems or products properly. Indeed, speaking with insurance and tech solution providers, when launching a new product or service, they make significant investments in training so that clients and advisers can understand their products.
(This barrier to entry is very significant among providers, effectively reducing innovation in the UK financial advice market.) Therefore, before taking on any new product or solution, advisers should confirm what level of training and support is on offer from the provider.
Advisers also need to be aware that they are compliant with regulations, for example FCA requirements on suitability and GDPR.
It is no use implementing a new system that is not compliant, and it remains the adviser's responsibility to ensure that the systems they use are compliant – it is common for the various fintech companies to not be directly FCA-regulated themselves.
Especially within insurance, the fintech provider is more likely to be regulated only as a broker, rather than an insurer themselves. GDPR means that client data remains in the ownership of the client, and it is the adviser's responsibility to safeguard that data through every step of the process, even if these are outsourced.