CPD  

How can technology help bridge the advice gap?

This article is part of
Guide to advice and guidance

Firms offering auto advice services use a ‘streamlined advice’ model to make a personal recommendation. 

The regulator found that some services lacked adequate fact finding and 'know your client' focus, instead relying on assumptions about clients. 

The FCA said: “In general, we were not satisfied with the strength of information gathering about clients' financial circumstances. For example, some services failed to request or gather adequate information about customers’ debt and other outgoings.”

Rory Percival regulatory expert at Rory Percival Training and Consultancy says: “When the FCA kicked off with FAMR it was quite pragmatic at resolving access to advice issues, by two courses.

“The banks coming back into the market or online advice services. Reading between the lines, it said the existing advice market is not one that is going to resolve the access to advice issues.

“Apart from the commercial side of things, I have asked advisers, if it was financially viable and profitable to deal with clients with £30,000, would you do it? And they said, ‘no, because it just would not be very interesting’.”

Mr Percival says technology can work in a way that makes people feel like they are getting the same level of advice they would get in a face-to-face scenario.

He says: “One is with younger clients in the accumulation stage who, who just want to pay into their pensions.

“And we can do that with simple online advice. You just need to know how much they can afford to invest that way and what level of risk they are prepared to take. You can do that online. 

“The second area would be, in the immediate run up to retirement. How do you structure your transitioning into retirement during the decumulation stage?

“That’s more difficult to do online because of the moving parts, but it is not impossible.”

One company, Wealth Wizards has gone a step further to address challenges in the DB transfer space by working on a tool for advisers to allow them to offer abridged advice.

At the first stage guidance and information is provided on defined benefit transfers; what it is, the pros and the cons, mostly in the form of video presentations.

At the second stage - the digital abridged advice process - the consumer would answer between 10 and 20 questions which would be presented in a straight forward format.

If it is deemed that they could be suitable candidates for a transfer, the customer would go to the final stage, where they would be able to speak to a regulated adviser.