The best type of change though, the one I like most, is the type that you create for yourself. Our view is that the world of the financial services intermediary is going to change quite dramatically in the short term (two to three years). If you think this is going to be one of those “RDR” articles don’t despair, it isn’t. The change that we envisage happening is down to another driver almost entirely. That driver is the internet and a seismic shift in the way that people are going to buy their financial product solutions in the future.
The role of the intermediary is going to change. It will change away from being the route by which people buy their products (Isas, pensions and investments) and the role will become that of a facilitator. The future financial services intermediary will segment their offering into two distinct deliverables.
The first of those will be financial planning which will come of age in the immediate future and there will be recognition that this is where the real value lies. Many IFAs are already buying into the fact that financial planning precedes financial advice and there is a significant difference between the two. The difference being that financial planning deals with the “what if” aspects of a persons future by providing a track to run on and financial advice simply being the mechanism for delivery of solutions.
The second offering will be the combination of information, guidance and execution facilities which will seriously empower consumers to arrange their own financial advice solutions.
So it is financial advice that is most under threat from the change that is taking place. Particularly at risk is the “bundled” financial advice approach whereby the advice constitutes a relatively small part of the proposition and where the product sale dominates the adviser/client relationship. Whilst the abolition of commission under the RDR will be part of the reason for this change more important to this change will be the availability of sites that make it very easy for the consumer to do their own thing.
Of course there will be many who disagree with what I have to say. Consumers cannot do it for themselves, it is too complex and too time consuming and people generally don’t feel confident enough- that’s why they need an intermediary. Without the web I might agree but it would be a brave man or women who denied the power of the internet.
If you want evidence then it is there in abundance. It is perfectly possible for the typical consumer to sit in front of his or her pc and purchase just about any commodity they want. Book your hotel or holiday, no problem. Buy a DVD, Book or CD that’s as easy as Amazon. Arrange your car, home contents, buildings or even life assurance and frankly nothing could be easier. It must now be the minority who have not heard or tried online banking. These execution sites are frequently supported by massive amounts of information and guidance in abundance.
What have I not listed? Of course if some one wants to buy an Isa, a personal pension plan or a collective investment arrangement then there is already a good deal of choice available to them. At this stage advice is in the minority via the web but this is now beginning to change.
So here is a view of one intermediary model that will begin to change the face of the IFA community. It is a segmented offering where financial planning is provided either face to face or in combination with an online approach. The firm then offers a website where the consumer at low cost, with whole of market choice can execute the solutions that have been identified for them really online and totally transparent..
Is this really possible? Well my answer is a resounding “yes”. This is because we have already taken the most significant steps to achieve exactly this type of model. This week we launched our website www.brilliantwithmoney.co.uk. It’s exactly what I have described above in that it offers information, guidance and to start with an execution only Sipp. Does it threaten the financial planning services that Informed Choice offers? No, not a bit in fact we think it will help to stimulate those people who really do need financial planning advice to contact us.
Does it cost a fortune to create such a facility? No, absolutely not but it does require a bit of creativity and drive and fortunately I have colleagues who have plenty of such attributes.
Deny the power of the internet if you wish. Cling on to the hope that people will always need advisers to implement product solutions for them but I see a different future and a very prosperous one for those who embrace such change.
Informed Choice chief executive Nick Bamford