Planners too attached to face-to-face advice
Financial planners have become overly attached to face to face advice with their incumbent clients at a time when the next generation of consumers have moved towards low cost, digitally provided advice.
According to FinDigital managing director Ian Dunbar the current financial planning business model is based on a set of clients who are happy to pay for advice as it currently offered while ignoring how younger clients interact with product and services in an online environment.
“Advice is currently populated by older people serving an older demographic which perpetuates this issue. How can they work out what Generation Y clients need if they do not have them as clients,” Dunbar said.
“Advisers need to shake up their thinking about what is their value proposition because often it is hard to see how things have been bundled together to create value which is not viewed in the same way by clients.”
He said technology was breaking down the value chain and discounting those parts of the chain that offered no value to a consumer but were often valued by an adviser which has led to the rise of portfolio management tools, online trading and robo-advice.
“If planners are looking to drop the cost of their advice they should start with a new paradigm. Instead of reviewing areas of high cost and changing the prices charged for these services they should consider changing their end to end service and examine those parts that can be automated,” Dunbar said.
“Good planners will become more strategic around advice and not around fact finds and portfolio management where technology has removed any advantage they once had. Complexity is where the next phase of advice will take place while single advice issues will be commoditised.”
According to Dunbar the financial advice sector had plateaued in its use of technology, having readily adopted platforms and wraps and desktop software, but was now using these to protect their client base instead of growing it.
“The financial advice industry is dominated by incumbent technology which, when it was introduced changed the landscape entirely, but what change has occurred since those times?” Dunbar said.
AUTHOR
Jason Spits
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