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Ian McKenna: Keeping up in the technology race

Ian McKenna MM blog 2013

One of the most used quotes to support why financial advisers will survive as a profession is Darwin’s statement that it’s not the strongest or the most intelligent that survive but those most adaptable to change.

The IFA community has undoubtedly been written off far too often, however, such statements are only valid as long as a species continues to be the most adaptable.

Two weeks ago I looked at why I believe it’s crucial for all advisers to put digital communications in place with their clients as a core part of their proposition. This message was reiterated last week by Brian McBride, chairman of online retailer ASOS, when he delivered a lecture on engaging with digital consumers as part of Marketforce’s Nicholas Barbon lectures series at the CII.

In McBride’s words “if you don’t think mobile matters you will be out of a job, or your company out of business, in four years’ time”.

Whilst I can imagine some readers thinking, what does a retailer know about financial services?, it is worth recognising that McBride was for five years until September 2011 managing director of Amazon’s UK business and is also a member of the Government’s digital advisory board.

Making a compelling argument, he reinforced his message identifying that only 30 per cent of smart phone use is actually for making calls and that mobile search now accounts for 40 per cent of all internet searches having quadrupled in the last year.

Also one in four mobile searches are now made looking for a local supplier. If you are making a local search you want a local service.

In order to adapt and evolve to meet the changing requirements of the consumer market it is really important to understand how consumers think about financial advice.

Cofunds has recently started some excellent work in this area and I would urge all advisers to read Verona Smith’s blog on this at https://blog.cofunds.co.uk/2013/02/verona-smith-getting-to-the-bottom-of-the-job-to-be-done/.

Although Cofunds has committed to doing further research in this area, the information already provided identifies significant differences between what consumers value from their advisers and what the advisers themselves feel is important.

I believe this sends an essential message about continuing to listen to and research independently customer views.

A previous study on this subject conducted over a decade ago in the US is frequently rolled out to make this point but it’s great to see analysis that is both current and UK-based.

Having been an advocate of the mobile platform for many years, I totally agree that it will become the dominant communication medium over the next few years.

I am, however, increasingly starting to consider what in turn will replace mobile.

If there is one thing we can learn from the last 20 years it is that market domination is transient.

Contrast the relative positions of Microsoft and Apple 15 years ago to where they are today, then add Google and Facebook, neither of whom existed 15 years ago into the mix.

Then try to think about who and what will be defining the way people live and work five years from now. During say a five year period where mobile will dominate, augmented reality, i.e. the delivery of data and information that supplements the real world experience, will I believe have a growing impact on our industry.

Mobile phones today are not really phones at all, rather digital lifestyle management devices which happen to include the ability to make a call. Whilst augmented reality can be delivered via a mobile phone or tablet neither are really the optimal device for such services.

The future may lie with devices like Google Glass, when I think about how this might be used to deliver new clients to advisers and deliver financial advice I see a whole new range of possibilities emerging.

Responding on behalf of the industry, Aviva’s Trevor Matthews gave an excellent example of this, citing the Property Guide app from Australia’s Commonwealth Bank which can be found here http://www.commbank.com.au/mobile/property-guide-app.html.

The app has actually been available since August 2010. Halifax deployed the same app technology in the UK last year although you might have missed it as their extensive TV advertising campaign for the app is an ego trip for the Halifax brand, which completely ignores how the app can deliver huge customer value.

Sadly the mortgage leviathan seems to have missed the point that in the 21st Century it is the customer experience that matters not their, frankly rather dated, brand.

My own recent experiences speaking to advisers about the importance of embracing mobile internet suggest that many advisers who have access to such tools are themselves reluctant to use them.

This appears to be primarily driven by their own discomfort with the technology. Indeed, I am beginning to think that such resistance, dare I say combined perhaps with an element of complacency, might in reality represent the biggest threat to the adviser community.

Organisations that do not listen to their customers and study their behaviour find it far more difficult to really understand their needs and adapt.

Having spent much of the last six months looking extensively around the world at leading-edge digital wealth management and advice solutions, I have found clear evidence that the overwhelming majority of consumers are not yet ready for a pure digital experience.

More and more, however, they are looking for a digital element within the overall services they are seeking.

As a community that has proven time and time again its ability to adapt to change I believe that whatever their own fears it is crucial advisers embrace these changes in the way that customers live their lives, as they have so many other changes previously.

Ian McKenna is managing director of F&TRC

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