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Ian McKenna in the US: Digital advice goes mainstream


Witnessing the first day of this years’ Finovate Fall event really brought home to me that the people who may have the greatest opportunity to benefit from the reinvention of financial advice as a digital service are the very financial planners and advisers who have previously supported customers in more traditional ways.

Almost all of the businesses who represented the highlights of the first day of the show have been founded by advisers who have seen the opportunity to leverage their own detailed understanding of what clients really want or need in order to design outstanding new services.

The event also reinforced to me the extent to which digital advice is already becoming part of the mainstream in the US and that in the UK it is only a matter of time before we see a similar evolution.

Producing a detailed summary of all these services and their benefits would usually exceed the word count I am allowed for this piece so whilst I will in time produce more detailed summaries of each of the following for now I will outline key elements of the most exceptional presenters on day one.

Blooom, (yes that’s right, with three o’s) presented a beautifully simple way of helping pension savers ensure they have an asset allocation that will allow them to achieve the most effective return on investment given their proximity to retirement. The company has recognised vast numbers of modest investors are overwhelmed by the diversity of investment choices offered by their plans and are simply looking for someone to relieve them of the burden of taking a decision. The service costs only $10 (£6) a month or $1 for investors with less than $5,000 in their 401k, the US equivalent of a DC pension. It is a great example of how to deliver a simple low-cost solution to such cases.

Conversely iQuantify demonstrated a service which it says provides a fully automated financial advice proposition, including recommendations for the tax wrappers and underlying investment funds for only $9.95 a month.

eMoneyAdvisor are a front office and client portal software supplier who have designed a service specifically intended to enable traditional advisers to counter robo-advisers like iQuantify. It is currently used by over 20,000 American financial advisers.

UK capabilities in this area were excellently represented by True Potential who demonstrated their highly innovative ImpulseSave micro savings solution, presenting this with capabilities for supporting both smartwatches and Google Glass. 

Flexscore, another organisation which has repeatedly demonstrated outstanding innovation in digital personal finance, showcased their mobile apps including the QuickScore capability which can begin to guide consumers towards better financial outcomes after asking them only seven questions.

All of the above businesses have been set up by individuals who have been previously or are still independent financial advisers.

My trip to the New York show this year involved a significant detour to Seattle to present a summary of the key attributes of leading edge digital advice solutions to the international gathering of the Financial Planning Association.  This included financial advisers from 20 different countries including Canada, Germany, Italy,  South Africa, South Korea, Indonesia, India, Japan, the United Kingdom and of course the United States.

Further evidence of the extent to which digital advice has now become part of the mainstream in the US was that the main exhibition at the FPA event area included representation from two former multiple best in show Finovate award winners; Learnvest and Motif Investing. Learnvest also gave an exceptional presentation on how the most effective solution for consumers is a mixture of exceptional technology delivered by personal financial advisers.

FCA chief Martin Wheatley repeatedly identifies digital solutions as the answer to the advice gap. Had he been present at Finovate he would have seen many solutions that would bring enormous benefits to consumers at prices that are affordable to even the lowest paid individuals. That the majority of these services are being delivered by businesses founded by independent financial advisers reiterates to me that UK advisors can also hugely benefit from making advice digital.

The line-up for the second day of Finovate Fallis very different to day one and I’ll produce a similar summary of the highlights tomorrow.

Ian McKenna is director of Finance & Technology Research Centre



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