The important question for those of us in or supporting the advice sector is, as this likely future unfolds, how can we assist the large group of individuals who need regulated advice for their financial wellbeing but are currently excluded?
Opening doors for the excluded majority
I venture to suggest two potential routes to opening up professional advice to a wider market of deserving people:
- Reduce the price point by adopting hybrid advice, blending automation with human interaction – this could be up to 50 per cent less costly to provide versus most of the current traditional advice services.
- Cut the price substantially via streamlined advice delivered fully digitally – a purely digital journey, where algorithms provide a recommendation and the suitability report is automated, is up to 90 per cent cheaper than traditionally provided advice.
While a segment of advice firms will doubtless resist changing their model ('if it isn’t broke don’t fix it'), I do believe it’s important for firms to at least consider the use of hybrid and digital to reduce the cost of giving advice.
The benefits of doing so include increasing the firm’s market share, future-proofing the value of the advice business (re millennial and Gen Z fee payers), retaining a profitable performance and, not to be overlooked, widening access to dependable regulated advice that gives more people the chance to enjoy a prosperous later life.
The best solution to my mind is one combining guidance, digital advice, and human advice. Different firms will need a different mix, depending on their target client segment, but all firms can benefit from better use of technology.
As enabling technology continues to develop at a rapid pace and is progressively adopted, traditional-only advice could have a limited shelf life.
Chet Velani is managing director of EV, a provider of integrated financial adviser and guidance technology solutions
