Although innovative transformation starts with the most agile sectors, the impact of the digital age is now seeping through to more highly regulated industries. The challenge traditional UK High Street banks are facing from their purely online counterparts is evidence of this, while Lloyds Banking Group reported that five million customers used mobile technology last year.
This is, however, just one of the ways that the progress of digitalisation is affecting the financial services sector. A whole host of political, economic, social and technological factors are driving the way financial advice is distributed.
The last two budgets have delivered massive changes in the way individuals can access their pension benefits, yet the choices available are not always clear to consumers. As a result, there are significant opportunities for financial advisers to provide tailored advice to older generations, minimising the risk of them making decisions detrimental to their future quality of life.
At the other end of the spectrum, a recent survey suggested that six out of ten teenagers are not learning about handling money at school. As today's youngsters are keen to take care of their money, they will be forced to become financially literate. With so much choice available, where will they turn for advice? And how can financial advisers make themselves relevant to this audience?
In this technological age, the next generation's web-savviness, coupled with smartphone and tablet penetration levels, means that digital tools are just a way of life to them. Additionally, as life expectancy continues to rise, the over-55s are also becoming more digitally mature, leading to a generation of silver surfers.
Such social changes mean that financial advisers need to look at omni-channel distribution to ensure they can service individuals regardless of their chosen method of engagement. It is no longer a case of how an organisation wants to engage with customers, the focus is truly on how consumers want to engage with the firm.
This demand for an omni-channel approach to customer engagement, where individuals can be transitioned effectively from online to offline face-to-face guidance, was highlighted in a survey of UK professionals by SSP. It found that just under half (49%) of respondents would consider paying for financial advice that was delivered online, or have already done so.
While nearly three-quarters (73%) attached a lower value to this advice channel, a similar number (76%) of respondents had not paid for the financial advice they had previously received. Although this perception may be due to the advice being provided for 'free' by an employer, all activity costs money, so clients need to understand the true value of access to an adviser's time.
A further survey of financial advisers by SSP showed that around two-fifths (39%) are either in the process of implementing a digital strategy or will be doing so in the next two years. However, over half (56%) have no plans to service customers in this way, despite the obvious benefits.
Although servicing a customer through any particular channel should not prove an issue for advisers, the process of tracking them through different channels and providing the right service at the right time is more problematic. More than half (56%) of financial advisers are unable to do this, meaning they are missing out on the ability to provide a connected service.
To ensure they are digitally relevant in the lives of their customers, financial advisers need to put a number of building blocks in place. These include an easily located website, optimised for all devices, an effective customer portal and a comprehensive Client Management Solution, as well as secure communications using the right tools.
Having the right technology in place will also enable financial advisers to unlock the full potential of their customer base through an understanding of their clients' current and potential future worth. This is where management information comes to the fore, with solutions that enable advisers to drill down into their data, interact with it and identify key trends.
Only then will they be truly relevant in the lives of all consumers whose household wealth would enable them to benefit from financial advice, including those currently managing their own affairs.
Further insight and feedback from the exclusive SSP research is contained in our white paper, Financial advice, but not as we know it. Please visit: https://talentedinnovators.uberflip.com/i/515817-financial-advice-but-not-as-we-know-it
About the author
Head of Strategy and Propositions — SSP Select and SSP Adviser. “What interests me is understanding how the financial services and general insurance sectors are evolving and helping clients respond to the challenges that this brings. I really enjoy working with clients to identify the business and operational drivers of value and then designing and delivering innovative insurance solutions that help them to meet tomorrow’s challenges.”More content by Sham Gill