Finding ways to cost effectively service clients, especially those with modest assets, post RDR is probably the biggest single challenge facing adviser firms today.
Many advisers are understandably reluctant to cast adrift former clients for whom traditional face to face financial advice is no longer economically viable in the new environment.
Today’s announcement by Aegon of a new range of collaborate services, which can be used by advisers to support client relationships is, in my view, a very positive development for firms who want to evolve their operating model.
Recent research conducted by Aegon identifies that as few as 8 per cent of the population receive regular financial advice on their retirement, over twice as many consumers, 19 per cent, take advice from time to time. This latter category should be potentially valuable customers, but how does an adviser stay in the forefront of their mind if they are not paying for regular advice?
There is a real need for services that can be used to incubate client relationships during periods when the customer is not going to pay for advice.
Using a service like this is an obvious way for advisers to help clients who might be able to pay an initial fee for setting up investments but will only be seeking further advice when their circumstances change. It is also ideal for helping advisers build their profile with members of group schemes who they may want to target for individual retirement advice in the future.
This capability can also be used as part of a digital proposition to support those on-going advice clients who want to be able to have the ability to monitor their investments frequently where the adviser does not have their own online aggregation service.
One of the most important parts of this proposition and what really differentiates it from offerings from other life offices and platforms, is the mobile first approach that is being put at the heart of all their new developments. This will give advisers the ability to provide information to clients whenever they want it, wherever they want it.
An overwhelming level of research has now identified that mobile is the platform where consumers are managing their lives and taking key decisions.
The cost for advisers of developing their own range of mobile services is inevitably significant, so Aegon in offering a wide range of tools for self-service use by the client but with the advisers brand represented, are providing an affordable way for advisers to be confident that transactional clients will come back to them when they do want advice.
Views on technology increasingly divide the adviser community. Many, indeed probably still the majority, are reluctant to embrace a full range of digital communication tools. This presents a challenge to platforms and life offices, should they follow the wish of the majority and not deliver services that can bring real benefits? Or, should they develop such services recognising that adviser take up may be limited initially.
My own recent experience is that whilst the technophobes may shout loudest, there is a significant and growing minority of adviser firms who are keen to embrace change of this type and are looking for help to do so. I believe firms in this latter group will welcome these developments and it is important to recognise that Aegon are not forcing these services on advisers. Those advisers who choose not to do so can continue to service clients using previous practices.
Forward thinking advisers are increasingly putting in place arrangements via their client management software to facilitate on-going digital communications with clients, however the commercial models from most software suppliers for such functionality usually involves a monthly cost per customer. This is clearly not practical where the consumer is unable or unwilling to pay for continuing advice and only requires a transactional service.
By supplying the technology to support such customer relationships, including the ability to facilitate initial and one-off charges, Aegon are helping those advisers who want to keep their brand in front of the customer on a regular basis. The service will also enable firms advising individuals to supply this service to group scheme members where the employer has used a different adviser who has no relationship with the individual member.
This is a capability I have been looking for pension providers to support for many years and it is good to see someone finally delivering on this need.
The significant increase in business levels reported by D2C organisations can be seen as a worrying trend for advisers. This new service now offers a half way house that advisers who might find developing their own D2C proposition too expensive can deploy to meet the needs of customers looking for such capability.
With this development Aegon just moved the market forward in a single bound. In delivering these services as an adviser lead collaborative platform, Aegon is very much throwing down the gauntlet to both life offices and platform providers. Whilst it readily admits to having come to the market late, the level of digital enablement it is offering is suddenly a long way further forward than the vast majority of their peers.
Ian McKenna is director of the Finance & Technology Research Centre