While regulatory pressure is a constant concern, the business of providing financial advice is benefiting from the adoption of technology.
This is something that is likely to continue, requiring advisers and planners to become increasingly savvy about the digital solutions they embrace.
Technology is a good thing for advice businesses and we are excited by some of the innovative solutions coming to market. Some replicate existing approaches to advice, automating steps along the way. Others, such as Ignition Advice and InvestCloud are helping firms reimagine the way advice is delivered – making the best use of tech and humans.
This will usher in an era of innovation that will make advice more accessible to the masses but might also put pressure on price and client experience.
How can financial advice businesses and employees of those businesses prepare? No doubt the change will require some tech upskilling, but just as essential will be developing the soft skills so important to building a trusted client relationship.
Soft skills are elements that many financial advice professionals find hard to define, yet they lie at the core of what they do.
In a report NextWealth produced for Fidelity Adviser Solutions in 2020 (Skills of the modern financial adviser), we explored the skills that are essential for success in today’s business environment.
We found that some important elements have remained unchanged, even though providing advice today is far less about sales and much more about planning.
Understanding the client’s needs and suitability, navigating the field of available products and solutions, and making and reviewing recommendations all remain essential to the advice process.
The report listed the following elements as core skills for financial professionals. Aside from numeracy and technical understanding, all are firmly rooted under a ‘soft skills’ heading:
Two crucial soft skills include
Due to the dynamic nature of today’s world and the seemingly unrelenting challenges we are all facing on a daily basis, clients are turning to their financial planners not just for reassurance on their investment strategies, but also for a deeper conversation about their concerns for their families and businesses and the uncertain future they are facing.
Around the time we were working on the report for Fidelity Adviser Solutions, PortfolioMetrix was exploring the importance of defining the value of advice. In a survey it released from its report, which 194 advisers completed, soft skills scored the highest and ranked in the top three:
Other elements that scored highly included:
With increasing pressure from direct digital routes to investment solutions and ‘advice’, plus the new consumer duty regulation, financial advice professionals would benefit from communicating with clients that they offer far more than technical solutions.
The human element should never be taken for granted – something that is often lacking when automation takes centre stage.
Anyone who has ever tried to call major corporations such as utility or telecommunications companies will know how frustrating it is to have to hang on the telephone for what seems like an age to be able to speak to a real person – if that option is even available (artificial intelligence is making online ‘bots’ increasingly common).
A good suggestion was made by PortfolioMetrix in its report: "It’s worth considering surveying clients to assess what they perceive as value from the relationship".
This can be very useful for flagging areas that could be strengthened and can act as a timely reminder that clients have a personal service with their needs at its heart available for when they require it.
Finally, our report for Fidelity Adviser Solutions highlighted that thought needs to be given to the qualifications required when searching for new recruits to a firm.
There are the obvious ones, relating to numeracy and business management, but it is interesting that psychology is also listed.
Obviously, it is not essential to have a degree in psychology to be able to interact with clients, but it shows how some advice firms are adapting their requirements to place more emphasis on the softer skills demanded by the role.
Certainly, the soft skills outlined in the reports referenced in this article are competencies that should be taken into consideration when recruiting, regardless of hard and fast qualifications.
Indeed, dare I mention the ‘s’ word – sales. It could be argued that sales skills are still highly relevant.
Speaking with advisers, we have found that consultative sales skills are regarded as very much still part of the job and advisers need to be competent and confident in drawing out a client’s underlying objectives and presenting a solution.
To sum up, it is easy to measure and quantify financial results, but it is also easy to underestimate the importance of the soft skills.
It is these that could turn out to be what your clients value the most.
Heather Hopkins is managing director of Next Wealth