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Ian McKenna: How clients will manage their money in the future

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For many years Finovate has been recognised as the event to showcase truly innovative services intended to disturb and transform the personal finance market.

This week at its European event 70 organisations, covering areas from cybersecurity to payments, peer-to-peer lending to financial advice, had a seven-minute opportunity to present their vision of the future. In this analysis, I want to look at just a couple that are directly relevant to the way consumers are likely to manage their money in the future.

MoneyHub is not new to this column or Finovate, although since I last looked at it in detail it has been acquired by South African financial services conglomerate Momentum. Given the new parent already had a similar personal financial management service in South Africa it is a huge compliment to the team at Blue Speck Financial, which produced MoneyHub and sister Yourwealth.co.uk, that Momentum saw features in the offering which made it attractive to acquire rather than bring its existing service to the UK.

At the beginning of the week MoneyHub showcased its Goal Life Planner, which shows how a personal financial management service can enable consumers to easily differentiate the impact on their wider life of choosing to spend (for example, holidays or paying off mortgage) or invest money in different ways. Using clear graphics and visuals, it takes financial planning and applies it in a lifestyle context. For instance, if a client receives a bonus, rather than just show the impact of different actions in cash terms, they are also represented as lifestyle benefits, such as paying a mortgage off “x” number of days earlier or being able to retire “y” days sooner if the money is committed to a pension.

The connection centre within the system integrates data feeds from Yodlee and other organisations to offer a detailed picture of the client’s financial life.

This latest iteration of the service, which is due to go live in the summer, will be available in three versions:

  • A customer direct offering via Yourwealth.co.uk, which is free or £10 per year with the Yodlee aggregation.
  • A version for IFAs and smaller wealth organisations called MoneyHub Connect, which, for £1,200 per year, will give advisers a lightly branded way to deliver a consumer service to clients. This includes the Yodlee aggregation for the first 20 clients and then there is a per-customer cost if that service is required.
  • A larger corporate version.

The company tells me that in using its connection centre advisers will still have the ability to port data in and out of the service even if they use a version delivered by a bank. I will be interested to see this work.

Meanwhile, affinity discounts play an important role in many employee benefits packages and are increasingly seen as a great way to complement financial education services providing savings to encourage user engagement. The technology to support such services has advanced rapidly in recent years. The card-linked offers platform demonstrated by Strands Finance is a great example.

When integrated with personal financial management, offers can be focused on behavioural activity on the customer’s bank account and credit cards, so the system targets users with those relevant to them. In addition the service uses a range of other factors, such as how much money has been spent in what types of shops, as well as wider demographic considerations.

A socialisation feature is included within the personal finance management version, where users can update their profile to include more information (such as personal hobbies and if they have children), which in turn improves the data used to target suitable offers. Each time a user accepts or rejects an offer, the model is evolved to improve the targeting of future offers.

The service is available either linked to Strands’ personal finance management offering or as a standalone component. As an advanced offers targeting platform I see this having huge potential in the employee benefits market and driving wider engagement with auto-enrolment, both in isolation and as a part of a wider range of service using personal financial management.

Ian McKenna is director of Finance & Technology Research Centre 

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. Psst! Hasn’t anyone let Paul into the secret? Clients don’t manage their money – that’s why there are advisers. Or perhaps he’s saying that we will all be redundant in a few years’ time.

    If he thinks that he’s a tad out of touch. They said the same about travel agents some time ago – but the good ones still flourish. I should know – I use one regularly, and in exactly the same way (bar an e-mail or two) that I did in the 1970’s. And judging by what I see I am by no means alone.

    There are those who have a life and really leave it to those who are expert – I think it’s called outsourcing.

  2. Harry,

    You seem to have missed the point, highlighted in the middle of the article that there is a specific version of Money Hub designed for advisers to use with their clients.

  3. Ian

    “The connection centre within the system integrates data feeds from Yodlee and other organisations to offer a detailed picture of the client’s financial life.”

    Are we sure this is what clients want? What “other organisations”? What detailed picture? In my experience clients don’t want to spread this information too widely or have it stored somewhere which may or may not be secure and which can be used to other ends.

  4. Ah yes. For advisers that don’t know how to use XL. And a tad less than £1,200 per year.

  5. @ Ken: The Yoddlee bank account data aggregation service has been around for many years now. It took a while to catch on in the UK because our banks were so paranoid about security. There is no chance UK banks would let the likes of MoneyHub have this data via Yoddlee unless they were happy about the security aspects of the service. And it’s important to note the information flow is only one way – from the banks. The banks will not accept instructions to transact via Yoddlee.

    @ Harry: I have used MoneyHub personally for a few months and have now archived my spending analysis spreadsheet – because it’s easier with MoneyHub. So much so my wife (who is not a financial planning geek, but is interested in what we spend) does it now.

    This is not an age thing, as my mother-in-law got up and running with MoneyHub in a few minutes.

    That’s why Ian is getting so excited and why for my money (forgive the pun) MoneyHub with its bottom-up approach is ahead of the more top-down solutions being marketed to advisers. For clients to value this they have to be able to use it easily.

    Having said all that not even MoneyHub would say they have a 100% adviser-ready solution right now. Adviser-platform integration is coming but not comprehensive yet. The likes of Voyant have nothing to worry about for a while yet. And they have a few bugs that they need to fix before I roll this out to clients in anger. That may come when MoneyHub 2.0 is released (this summer)?

    I think this stuff is ready exciting because it moves the conversation even more away from product and towards the stuff that clients value – their goals.

    The next few months will be crucial to see whether the likes of MoneyHub / Samedia / Inteliflo can deliver the complete package to advisers and their clients. All three are working from different starting points it’s going to be interesting to see which approach works best.

    It’s all about delivery now.

  6. Each to their own, consumers will decide what to spend their money on, and whether having an adviser or a software generated analysis to manage their financial affairs is good value.

    Hopes, wants, aspirations etc cannot be accurately assessed by non human interface, a skilled adviser can understand client emotions and tailor their advice accordingly.

    Maybe this is a useful visual aid to a planning discussion, but ultimately it is a marketing device as the data will be used to target products and services. No problem with that, it is a lifestyle service which could appeal to a mass market, covering a range of non regulated services, but it should not be confused with high quality bespoke advice if that is what the consumer is seeking..

  7. To think that the retail financial services industry in the UK will somehow be unaffected by technological innovation is rather naïve. Yes of course some travel agents remain, but a fraction of the number that were on the high street 10 or 15 years ago – the ones that survive offer bespoke service to a niche market and operate on very thin margins.

    Blockbusters, Woolworths, Kodak and so many others were also naysayers.. Advisers who think that they can charge 50 or 100bps to sell investment funds, ISAs and pensions over the next 5 or 10 years may struggle.

    Forward thinking advice firms will blend the best of technology and personal services to a small group of clients who value the comprehensive, modern approach.

  8. To all those who see Moneyhub as a replacement for an adviser, think of it as a calculator not an advice robot. Think of all the accounts departments in the 1960s who had pencils, paper, rubber, adding machines and mental arithmetic, and old fashioned typewriters and ribbons to produce their work. Even the most brilliant accountant could not have produced up to date accounts, accurate to the nearest penny and presented in a way that makes it easy to read and understand in a timely fashion. If the same brilliant accountant did not invest in any new technology and was now operating in 2015 with the same number of staff, pencils, paper, rubbers, adding machines etc would he/she be able to offer the same insight to his executive board, compared to an average accountant who had invested and inherited modern accounting software and technology? If the accountant with technology does not know how to advise and manage the figures then the technology won’t be much use, but if the accountant with the expertise doesn’t have the tools to do the job he won’t be practising much longer. And once the board/clients see what can be produced and how such information can be used to ENHANCE the adviser’s skill and knowledge why would they want to go back to the old days?

  9. I agree with Tim Page. We have Moneyinfo from Sammedia which aggregates info using Yodlee I think too.
    I would however prefer if our backoffice system (Prestwood/Truth) did this as it would be a single input then and we could give it as a smaller scale version to our clients perhaps in due course.
    In 1999 the exchange had a link up with Microsoft for their “Money” programme which could be made available for clients and the adviser to view too, the link up lapsed however and take up by clients was really quite low.
    Personally I don’t think people are actually that interested, they want their adviser to do it all for them, but this is time consuming which is where using aggregation via something like Moneyinfo may be more use to the adviser in time saving when preparing a lifetime cashflow plan than the consumer realises and is willing to pay.

  10. True Potential Wealth Management has as part of its back office support system a goal planner tool and an ‘Impulse Save’ button where clients can later go to their secure webpage and increase contributions via their mobile, tablet or computer. As an adviser you calculate what the client needs to invest/save in order to achieve a specific goal and the graph will show initially how far off the target they might be and each time the client wishes to independently increase payments, or pay in a bonus etc, the graph will adjust to show how much nearer they are to achieving that financial goal.

    No additional fee required to obtain this facility, if you are a directly authorised IFA you just need to adopt the TP system!

  11. Katrina Filer here, I manage the Adviser proposition at MoneyHub and have been reading your comments with interest. Thank you to those who have supported us and for those who have spoken positively about the use of new technology.
    I have spoken to some of you directly and cleared up some of the confusion, which surrounds our model, but felt it was important to address some of the points made in this column.
    > We do not sell data.
    > We suit a range of client types and business models including full advice, remote and self-serve propositions
    > Security is hugely important to us and we invest heavily in solutions and people to make our service safe and secure, including moving to new premises. We comply with industry IT security standards and voluntarily commission regular external audits by independent third parties who test our processes.
    We are passionate about what we do at MoneyHub and would welcome you to contact me or have a look at our website to learn more about what we do.

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