One of the most polarising issues in our industry is the importance of online delivery of information to clients.
Most advisers I meet still believe their clients do not use technology and have no appetite for receiving financial information online. A significant and growing minority, however, recognise that financial advice cannot be immune from the transformation that technology – especially mobile devices – is bringing to all industries.
An increasing body of research supports the latter view. Compeer’s Financial DIY Report, published in February, identified that over one in three UK consumers are using the internet to research financial products in preference to advisers. Other less focused studies suggest this figure may be even higher and a recent study in Australia identified that this ratio has increased to one in two among Australian consumers.
The Compeer report also identified a 62 per cent increase in execution-only as the preferred channel for mass- affluent consumers.
Fortunately, increasing numbers of new services are emerging for those advisers who regard giving customers online access to their investments and other financial products as a valuable way to complement their proposition.
The challenge presented by compliance is an objection frequently put forward by those who argue against such services. A new proposition launched last week takes a different approach to address this issue.
Money Hub Connect is a service from YourWealth.co.uk, the consumer-facing personal finance site which is designed to enable advisers to provide a co-branded service to their clients where the consumer can explore both personal financial management issues, such as day-to-day budgeting and taking better control of their income and expenditure, and longer-term financial planning matters. The service is delivered so that the customer can see all their short-term and long-term finances in a single resource.
This enables the user to set and manage budgets and identify and plan for personal goals – both short- and longer-term – with the ability to model the cost of achieving such objectives. The consumer then decides how much information they wish to share with their adviser to obtain financial advice.
YourWealth managing director Toby Hughes believes that because it is the consumer who sets up the plan, including details such as growth assumptions, any decisions reached by clients as a result of using these tools would be categorised as non-advised. This makes sense although it would be really useful if the Financial Conduct Authority and the Financial Ombudsman Service provided further clarity around these areas.
There are real consumer benefits to be achieved from services like this but many organisations are holding back from developing them because they feel there is a lack of regulatory clarity.
Money Hub Connect is a version of the site that can be delivered by advisers. It includes the ability to deliver aggregated information on clients’ investments from a number of platforms – currently Cofunds and Ascentric although I understand several more are to be added soon.
In addition, the company plans to put in place similar aggregation with life offices and is also seeking integration via adviser client management systems. To support the personal financial management content, the system can use a Yodlee feed to provide access to the client’s bank accounts, credit cards and a wide range of other personal financial services. The cost of this feed is not included in the price below and amounts to an additional £1.49 a month or £9.99 a year.
Tools and calculators are also provided to enable consumers to explore a range of scenarios around life insurance, savings and investments, pensions and retirement, mortgages, loans and tax.
Users can create financial goals within the system and identify the level of contributions required to achieve them.
The initial goals supported are retirement, savings and debt but several more are to be added soon.
The system is well positioned to support advisers who want to add an online experience for retainer clients and also continue to have tools to support a relationship with transactional clients.
Importantly, the pricing is particularly competitive for firms that want to provide such tools to all their customers, regardless of the basis of the relationship, because unlike a number of other propositions in the market, the service is not charged on a per client basis or indeed per adviser.
There is a set-up fee of £350, an optional fee of £150 to have a highlighted entry in the “find an adviser” service and a £40 monthly charge which allows access for up to 15 users within the adviser firm and an unlimited number of clients. All figures are subject to VAT.
Overall, I really like this service but I think there may be a need for more validation of the tools. For example, my testing enabled me to generate a scenario where the user had a pension pot of over £31m. I think someone needs to explain pensions to the developers.
It is only fair to say the company responded quickly when I pointed this out and it said a further version of the software is due for release next week. While I have not been able to carry out an exhaustive review of the tools, such flaws appear limited, unlike at least one other service I can think of.
Apps are available for the iOS, Android and Kindle operating systems.
Hughes says he believes there are elements of this service which are unique globally and, while I would not go that far, Money Hub Connect certainly appears to be both well positioned and well priced.
It is worth serious consideration by any adviser looking for a solution to help them put in place a digital communication channel with their clients, and especially by those who want to find ways to stay in touch with transactional customers as well as those paying for regular advice.
Ian McKenna is director of the Finance & Technology Research Centre