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Ian McKenna: How tech incompetence could lose you 80 per cent of AUA

Not enough firms are building their proposition with the next generation in mind

Evidence that firms can expect to lose over 80 per cent of assets under advice presents a serious reason to review operating models. Indeed, research has shown that, in the majority of cases, those inheriting wealth take the money to new advisers.

How many firms are building their proposition to enhance relationships with the next generation?

The impact of this challenge and how to fix it was one of the most discussed topics at this month’s Invest 2018 conference in New York.

While there are significant differences between the long-term savings industries in the US and UK, I often find that technology’s impact on advice across the Atlantic provides a good indication of similar change to come here. In fact, over a seven-year period, it has consistently been the case that, give or take six months either side, three years after something happens in the US the same will happen in the UK.

Ian McKenna: Think outside the box on affordable advice

With individuals who cannot remember a time the internet did not exist becoming an increasing part of society (the first millennials reach 40 in two years), those inheriting will expect to see technology involved.

Global head of wealth and asset management at software company Salesforce IIan Davidovici caused much amusement when he told the story of recently being approach by his parents’ adviser, suddenly taking an interest after realising his clients were nearing their sunset days. He, of course, already had his adviser relationship well established.

This highlights the need for firms to invest in young advisers and the technology they will need to service their peers.

But it is not just the younger generations after such an approach. US robo adviser SigFig showed how savers in their 50s, 60s and 70s use their service in significant volumes, too. Similar evidence from Intelliflo suggests this is also the case here.

JP Morgan Chase global head of digital wealth management Kelli Keough made people think when she questioned why someone with $100,000 to invest would benefit from better technology options than someone with $100m.

In reality, much of the wealthy have been early adopters of technology. They can afford to be. So is it not time more firms followed the lead of Seven Investment Management with its Seven Imagine service? The team seem to be quietly stealing a march on competitors in this area.

Ian McKenna: The four foundations of a solid adviser tech strategy

Also crucial is the client on-boarding process. If you have persuaded an individual of the merits of your investment strategy, do not make them go through admin hell moving to your service. Companies like Amazon and Apple have made exceptional on-boarding experience the norm. If you put someone through paper hell and make them feel like a number, that will set the tone for how your company is perceived.

Another big discussion point at the conference was how soon the number of consumers getting digital advice would exceed the number that take human advice.

Head of wealth management and banking at savings app MoneyLion predicted the point would be crossed in the US by 2022. I believe the UK can also reach that tipping point by 2022, especially if the energy previously focused on the pension dashboard can be diverted to an auto-enrolment extension of open banking targeted at younger savers.

Invest 2018 presented overwhelming evidence that we have passed the point where technology in wealth propositions is a nice-to-have. It needs to be a core part of a firm’s DNA.

Those that are still failing in this area have subconsciously taken the decision to close their business. This will create huge opportunities for others that can deliver. With more than £4 in every £5 invested a potential target as inherited wealth transfers over the next few decades, the opportunities are enormous.

Ian McKenna is director of the Finance & Technology Research Centre


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  1. Why are AUM important? It should not be the driving factor when giving advice but sadly it is.

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