Your IndustrySep 9 2021

Annual client reviews 'simply not enough' in post-Covid world

Supported by
Charles Stanley
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Supported by
Charles Stanley
Annual client reviews 'simply not enough' in post-Covid world

The rise of hybrid advice models bring opportunities for intermediaries, but advisers have warned the profession must strike a balance between sporadic communication and the risk of "over-provision" of their services.

The prospect of regular face-to-face meetings is becoming a reality again for intermediaries, but advisers are not willing to completely let go of the virtual sessions on which they have relied over the past 18 months.

Speaking on a panel at FTAdviser's Financial Advice Forum on September 7, Kanishk Swarup, partner at St James's Place Wealth Management, said a hybrid working model allowed him to engage better with his clients.

He said: “The previous model where a financial adviser would have a review once a year with a client just to touch base is simply not enough.

"I think we need to do a lot more thanks to the technology that is now available to us to increase those touch points to stay in touch to understand what's going on, and being far more dynamic than we've ever been before.”

If we think that hybrid advice is simply doing everything online then we're going to be just laying the path ready for disruptive innovators to come and sweep it all up.Richard Ross

He said the most important thing of being a hybrid adviser was to be "completely agnostic" to the platform used to communicate with clients.

"Whereas it used to be a face-to-face meeting, so you would drive to the client or you would get the client to visit your offices and that is where you would do your meetings, I think increasingly now especially post Covid, it doesn't matter whether it's face to face or whether it was coming over Zoom or emails."

Richard Ross, director at Chadwicks, agreed technology was allowing him to engage remotely and give a better service to his clients.

But this was just one aspect of being a hybrid adviser, he said. He also warned of the perils of advisers "over-providing" to their clients.

Threat from the outside

“What tends to happen - and you can see this happening in financial services all the time - is that the incumbent advisory practices will tend to try and move higher and higher up the value chain,” he said. 

“They'll do that by adding more and more services to what they're providing and in doing so they are trying to get to those more profitable clients.”

In doing so, Ross explained, for many of their clients advisers were “over providing” and in the meantime, disruptors were coming in at the bottom asking what these clients really need to get the job done.

“They will come in and they will start eating out the smaller clients. Of course the incumbents don't even notice because these are the clients who are investing £5,000 to £10,000 and incumbents aren’t interested in those, until what happens is the disruptive innovators get sufficient critical mass to start eating into the dinner of the incumbents.”

He added: “The danger is that if we think that hybrid advice is simply doing everything online then we're going to be just laying the path ready for disruptive innovators to come and sweep it all up. 

“We have to think more deeply than that. We need to really think about a proposition, about how our proposition is responsive to the threats of these disruptors, so we can actually be there and can change before these disruptors come in.”

Closing the advice gap

Kate Holmes, chief innovation officer at Innovating Advice, also discussed ways that hybrid advisers could aid in diminishing the advice gap.

She noted that traditionally, financial services has been firmly focused on bricks and mortar: everything has been in person.

There's a lot of inertia that can happen, and clients might stay with financial planners longer than they really want because it is a hassle to find another one to transfer everythingKate Holmes

However, the way in which the pandemic accelerated the shift to virtual processes could be a route to solving the industry's shortage of advisers, she explained.

“I've worked with financial planners around the world and see a lot of really great examples of thinking ahead to the intergenerational transfer or thinking about hybrid advice and leveraging technology. 

“It's a great opportunity to bring in the next generation of financial planners and leveraging technology to then attract that younger audience, ideally where possible starting with the clients, or with the children of your existing clients. Because unfortunately, and I know a lot of people don't like to hear this, but we see there's a lot of inertia that can happen, and clients might stay with financial planners longer than they really want because it is a hassle to find another one to transfer everything. 

“That's why a lot of times we'll see that when the parent dies and the money's transferring, the inertia is done, the child has to kind of make a decision and that's when they might decide to leave.

"So if you can leverage technology and have younger planners, you're going to have lower expenses and by leveraging technology, maybe those planners are all virtual, and that will allow you to potentially serve that clientele at a lower price point.”

Ross said the primary way of attracting the next generation was through financial education and literacy.

He said video clips that got across an educational message were cost effective and interesting.

“We put them out for our clients' children and they are very much engaged. This is just looking at foundations of investment to try and give people more opportunity for self service.

“It's incumbent on us as a profession to give the young people and everybody the tools to do that and then they will realise that actually some of those things, when their life gets more complicated, then they could do with an adviser.

“And at that point there, they'll be happy to pay for that. But up until then, all we're doing is educating them, we're building trust with them, we're showing them that we're a profession that actually doesn't want the sale today, wants a long term relationship, and we're building that relationship.”

sonia.rach@ft.com

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