Advisers need to adapt or risk seeing their role become obsolete: this is the stark warning delivered by the CFA Institute in its ‘Investment professional of the future’ report published in June.
The chief aggressor, according to the report, is the rise of robotics such as artificial intelligence. While not without a range of teething problems, algorithms’ potential role in the provision of financial guidance is already well established.
Meanwhile, services such as Multiply, the first FCA-approved financial advice app, have claimed that advice can be delivered digitally in the not-too-distant future – perhaps even as soon as this year.
But these are not just the views of external critics. Advisers, too, are concerned about the sustainability of their profession – in its existing form at least. The CFA’s report also included a poll, which found that 54 per cent of the institute’s 3,832 members under the banner of ‘financial adviser/planner/wealth manager’ expected their roles to be ‘substantially different’ in five to 10 years’ time (see Table 1) – this was second only to information technology workers. In addition, four per cent of advisers feared the role would not even exist.
Table 1: Percentage of CFA members who think their roles will be substantially different in five to 10 years’ time
Financial adviser/planner/wealth manager
Accountant or auditor
Research analyst, investment analyst, or quantitative analyst
Relationship manager/account manager
Chief investment officer
Source: UK Finance/CML. Copyright: Money Management
Understandably, most intermediaries are not ready to throw in the towel just yet. Instead, some are looking to build on the best attributes of the traditional advice model, namely its human side. A key aspect of this is behavioural science, which aims to use skills and technology to develop a deeper understanding of what makes consumers tick.
“The industry seems to be obsessed with ticking forms and fact-finding people; they’ve negated, over the years, their soft skills and acquiring soft facts,” says Neil Bage, founder and director of behavioural insight at solutions provider Be-IQ.
He explains that the human touch is more important than technology in the advice process. “When you look at the success or failure of financial plans, it’s not to do with the hard facts delivered in the fact find, it’s all to do with the soft facts about a person – how they behave, who they are as a person, how they’re going to react, how emotional they are, how stable they are.”
Chris Budd, founder at Ovation Finance, notes that wellbeing also has a pivotal role to play. Advisers should be paying closer attention to how money can help people to be happy, rather than the money itself.
“That’s all well and good, but how do we know what makes us happy? That’s where behavioural science has a part to play,” he says.
“Our behaviours make us unhappy; we’ve got external influences such as advertising and the media, which are trying to tell us that money is the object, when actually happiness is the object.
“The role of the adviser, therefore, is to help the client realise that their behaviours, and particularly a focus on money as the end, is making them unhappy. And show them what behaviours will make them happy.”