TECHNOLOGY IN YOUR BUSINESS of professional advice . OpenMoney ’ s advice gap research found that one in ten respondents who have not paid for advice in the last two years say they now plan to do so , but this rises to one in five among those aged 18 to 24 4 . However , this demographic is unlikely to have accumulated investible assets on a par with typical financial advice clients . They may also have simpler needs than older clients who are seeking help with retirement income or to protect intergenerational wealth . Delivering traditional full-service advice to this group may not be cost-effective for many advisers , yet there are clear long-term benefits of taking on younger clients – for both the advice business and the individual ’ s finances . We think all these factors will drive more firms towards hybrid advice . A recent poll by The London Institute of Banking & Finance found that 91 % are likely to adopt a hybrid advice model over the next three to five years 5 . But this is not the robo-advice we ’ ve seen previously . A hybrid approach helps to fill the gap between full hands-on advice and DIY investing . It is a strategic , flexible and complementary blend of digital and human advice , providing investors with regulated advice appropriate to their circumstances , while allowing advice firms to deliver a cost-effective service to a greater number of clients with different financial needs and at all stages of wealth accumulation . An effective hybrid strategy requires modern , cloud-based technology that automates administrative tasks , freeing advisers and paraplanners for more high-value activities . We expect to see an increase in migrations from traditional bespoke software solutions to an end-to-end , single platform that supports the whole advice lifecycle from the initial digital fact find to the investment strategy and ongoing suitability reporting . Using technology to best effect can enhance efficiency , reduce costs and allow advisers to effectively serve a broader range of client segments while maintaining their fee levels .
The rise in cashflow-based planning Another consequence of the pandemic is lasting changes to the way we work . The flexibility of remote working has allowed some people to move from traditional 9 to 5 jobs to find a better work / life balance , while redundancy and furlough have led to a surge in people switching to gig work or turning to ‘ side hustles ’ to supplement or replace their primary income . Financial advice models and strategies must adapt to reflect these changes in working practices with variable and diverse sources of income . We expect that advice professionals will move away from generic retirement-based planning in favour of cashflow-based planning models that help clients understand their income requirements at all stages of their lives and the need to protect their finances against uncertainty and instability . To support this shift , we see future investments in modern cashflow planning technologies that can incorporate all scenarios into a single , dynamic financial roadmap . Advisers and paraplanners will adopt cashflow planning technologies that can aggregate various data to deliver effective planning options and drive the client ’ s engagement with their long-term financial plan . Cultural shifts , technological advances and consumer preferences are changing the financial advice experience . Increasingly clients expect to choose when and how they meet their adviser – digitally , in-person or a mix of both . And firms will increasingly need to work more efficiently to deliver a consistent quality service to more clients with fewer resources . As a result of these pressures , this will be a year for digital transformation , with firms streamlining and optimising processes , while serving a broader range of clients . The next year has the potential for substantial progress to be made in widening access to financial advice , which has never been more important .
Call 0330 102 8402 visit intelliflo . com or email info @ intelliflo . com
1 https :// www . fca . org . uk / publication / corporate / evaluation-of-the-impact-of-the-rdr-and-famr . pdf
2 https :// www . lloydsbank . com / assets / media / pdfs / banking _ with _ us / whats-happening / 210513-lloyds-consumer-digital-index-2021-report . pdf
3 https :// www . ftadviser . com / your-industry / 2021 / 05 / 12 / world-has-changed-advisers-must-embrace-digital-amid-fee-pressure /
4 https :// www . open-money . co . uk / advice-gap-2021
5 https :// www . financialplanningtoday . co . uk / news / item / 13644-9-out-10-advisers-moving-towards-hybrid-advice
# 04 | SPRING 2022 | 19