In this day and age, it is difficult for financial advisers and chartered financial planners to ignore technological advances, not only within their industry but as a whole.
Media outlets, widely cover the rise of artificial intelligence (AI), automation on a daily basis and in relation to the financial advice arena – the rise of robo-advice.
So, what should financial advisers and CFPs do?
Should they embrace technology for the sake of their clients or should they “stick to what they know best” – good old-fashioned face-to-face advice.
New research from Octopus Investments highlights that most financial advisers (76% out of 275 advisers polled) believe a “hybrid model” – combining a traditional face-to-face service with robo-advice is the future.
An even bigger majority (81%) said they believe that the next generation of financial advisers will have to incorporate aspects of robo-advice into their offering.
Phil Bray, founder and director of the Yardstick Agency – a marketing agency that provides support to financial advisers – says: “The majority of financial advisers and planners we speak to don’t see robo-advice as a significant threat to their business.
“Nevertheless, forward thinking firms are embracing digital solutions and combining these with the benefits of face-to-face advice. For example, GDPR, the rise of online scams and a desire to reduce paper, means many firms now embrace secure messaging and document storage. While an increasing number of firms are providing clients with online valuations.
“Before introducing such changes though it’s vital that firms talk to their clients to understand what they want and need. All too often advisers and planners have introduced new initiatives without consulting their clients and found the take-up rate to be frustratingly low. Why? Because clients weren’t asked what they needed or wanted.
“Before any new initiative is introduced, we recommend talking to clients. Use surveys and focus groups to understand what clients will value. Then deliver it.”
How can becoming more digitally focused help?
If advisers choose to grow their business digitally it can help in a number of ways: attract new and perhaps younger clients; promote and maintain the firm’s brand; encourage advisers and clients to engage in financial issues on platforms such as Twitter and LinkedIn.
The Chartered Institute for Securities and Investments (CISI) head of financial planning Jacqueline Lockie said the hybrid model, as long as it is underpinned by smart technology, will be the future.
Lockie told Professional Adviser: “It is clear that investor habits are changing as the next generation of adviser clients comes through,” she said.
“Millennials have different communication preferences with a tendency to rely more on technology and information online.
“However, research has found that young people are still big fans of human interaction and relationship-building, which is key to developing trust.”
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