Ian McKenna: Clients prefer ‘screen’ advice to face-to-face

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I recently spent an intense three days in California at an event called Technology Tools for Today – or T3, as everyone abbreviates it. This is the main annual conference focusing on technology for US advisers.

During the show I witnessed an awesome array of new technology to support advisers building relationships with clients. There was also compelling evidence to suggest advice firms should significantly rethink how they use technology and their operating models more generally.

MoneyGuide Pro presented some interesting research it had undertaken with consumers aged between 50 and 70 into how they prefer to receive advice. The study, which included biometric testing, scientifically measured clients’ emotional reactions to different parts of the advice process.

The results strike at the heart of conventional wisdom in our industry. Indeed, it found clients would rather deal with their advisers via a screen-share than at face-to-face meetings. I can hear a chorus of readers shouting “rubbish” already. But these findings come from real consumers engaging in the advice process and are measured using the latest scientific techniques.

Interestingly, political lobbying group Cicero recently produced a UK study that came to a similar conclusion. It is foolish to ignore multiple studies with similar results.

MoneyGuide Pro also presented evidence of the volume of new business that can be generated using a process it has been piloting. Potential clients complete an online factfind, which generates an initial financial planning analysis that the consumer is then encouraged to validate via an adviser. In one case, a firm created new investment opportunities in excess of $100m in just four days.

Elsewhere, Fidelity presented research findings comparing the income profitability and job satisfaction of so-called e-advisers (firms who have embraced technology) with those still operating using more conventional methods. It found that e-advisers have higher assets under management, average client balances, income and job satisfaction than their traditional counterparts.

Users of FundsNetwork would be reduced to tears if they saw what Fidelity and its subsidiary eMoneyAdvisor deliver to American advisers. In fact, watching its demonstrations at the conference, I became increasingly angry at how poorly UK advisers are treated in comparison. This has to change. Fidelity has the technology within its global business. Why won’t it bring it to the UK?

eMoneyAdvisor also demonstrated a brilliant prototype of virtual reality financial planning, which really had to be seen to be believed. It honestly felt like something off the holodeck of the Starship Enterprise. And it was certainly not alone in demonstrating some stunning technology.

For example, Riskalyse showed a one-click fiduciary solution, which can rebalance a client’s portfolio, including all the trades, in seconds. It seriously made me question whether the current FCA client money rules are actually operating against the interests of the consumer.

Outdated regulation

While the regulator deserves praise for the way in which it now embraces technology, T3 showed what would be possible if we had not been having to build digital solutions around a rule- book designed to address advice processes in the 20th century.

Technology adoption has been constrained in our industry because we have tried to come up with digital versions of analogue processes rather than designing for digital from scratch. Based on what I have seen, there will be enormous benefits for consumers if the FCA can tear up Cobs and all the related regulations, and produce new rules for the world-leading fintech community in the UK.

Of all the valuable messages from T3, one resonates more than any other: technology will not replace advisers but it is probably the end for those who do not use it.

T3 has been one of the most productive conferences I have attended in a long time, reinforcing much of what I had believed about the future of advice.

It was great to see so many agile minds looking to reinvent advice in ways that can better serve consumers. Space does not allow me to go into all the great offerings I saw. However, you can read my blogs on the event at DigitalWealthInsights.com.

I have already told conference host Joel Bruckenstein I will be attending the 2018 event in Fort Lauderdale. I would wholeheartedly recommend it to anybody interested in the future of advice. And not just in the context of what is possible using technology but from a broader perspective too.

Finding a way to deliver the services a growing band of digital consumers young and old are seeking cannot be done by sticking to a 20th century approach. We need 21st century solutions for today’s customers, now.

Ian McKenna is director of the Finance & Technology Research Centre

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Comments

There are 14 comments at the moment, we would love to hear your opinion too.

  1. Great piece Ian. I now conduct about 60% of my client meetings via online video and screen share, and I concur that clients do love it. It’s convenient for me and for them. I’d say it is 95% as good as being in the same room, and I have completed several seven-figure cases for clients I have never met in person, thanks to this technology.

    The future’s bright, as long as the regulation catches up…

  2. Thanks for this Ian. I whole heartedly agree that virtual face to face advice is key to delivering personal advice in a way that is convenient, efficient, engaging and safe. Forms do, however, need to think carefully about how that advice process might be slightly different to how they deliver it in person and also how the necessary technology integrates with their existing technology and processes. The correct video & screen sharing technology will be dictated by the firm’s client type, complexity of advice and internal procedures. Just using skype is unlikely to cut it. readers can download a free guide to digital face to face advice from http://www.finsolsystems.com

  3. Denis Mitchell 6th March 2017 at 3:58 pm

    Strange that a technology conference comes to the conclusion that technology is the solution 🙂

  4. 1. What works in the US doesn’t always translate well in Europe.
    2. Personally I see ‘ on screen’ as a gimmick. I actally tried it and told the client that I wasn’t actually waring any trousers.
    After an initial face to face, often all that is required is telephone, e – mail and post. Some of us are actually grown ups and can even manage very well without social meeja.

  5. No they don’t.

    • Don’t what? Manage without social media? Your clients may be teenagers. I actually cavassed mine (age range 35 and up) only a very tiny number used it. Amongst friends & relatives it seems that in the main it is oly the teeny boppers that are engaged. Most of these sites have diminishing number of users and most make losses. Twitter has lost £2billion since launch in 2006 – that’s £500,000 a day!.
      The others don’t do much better. All fluff and puff??

  6. Have to agree that this technology will be part of an advisers business model in the years ahead and it should be welcomed

    I know a number of advisers who are using this technology to their benefit and they are certainly not Millennials they are of the “Baby Boomer” generation
    The only reservation as Jason states the first two years may be better having personal meetings due to complexity of the advice given at outset

  7. richard wright 6th March 2017 at 5:01 pm

    Ummm I’ve actually been doing this for years so its no new thing , I’m not sure most clients Prefer it, I would say most clients Accept it, but some will not do anything unless its face to face!

  8. “Fidelity has the technology within its global business. Why won’t it bring it to the UK?”

    Good question Ian. Clearly there must be a reason or they would introduce it here and clean up. The answer, as you allude to, is regulation. COBS is simply not fit for purpose when it comes to robo-advice.

    MM’s article this week, “FCA: We don’t want IFAs to be ‘order takers’”, highlights the issue. At the same time it feigns favour toward technology, the FCA makes statements like “Part of advisers’ role is to challenge clients and understand what’s driving that decision.” This necessarily assumes a client that may not know what they want or be capable of knowing what they want, the solution being a listening, probing, thinking, adviser. No AI is anywhere close to that now or in the foreseeable future. The result is a regulatory risk gap that sane firms are unwilling to bridge.

    On the other hand, if they relaxed COBS sufficiently for an electronic advice solution then they would have to relax it for the face-to-face adviser too (or have an openly, unlevel, two-tier system). The problem is that would also involve ripping up a whole load of guidance around suitability which would be tantamount to admitting you were wrong in the past, so that’s unlikely to happen.

    In the meantime, the lack of availability of advice means clients (at least those that can afford it) will be paying through the nose for some time to come.

  9. 100% agree- we started a remote model in Alexander House exactly because we felt that consumers would adopt it quickly and would actually drive this delivery mechanism eventually, I would suggest that it is the advisors’ attitude and confidence in the use of technolgy that is main thing holding adoption back along with product providers still forcing the process back to paper as they demand ‘faxes’ and ‘paper signatures’. Admittedly this is a new approach but we have to set the sense of direction and make it easy to embrace for everyone. In Money Honey Financial planning, which we hope to have authorised later in the year we will ONLY offer advice via videoconferencing with an automated offering for those that prefer it. The fees will also be lower than the norm to reflect the cost-savings to us. Just need all product providers, fund managers and platforms to step up to the mark now. In 4theRecord we are trying to train advisors on the use of technolgy so they have the confidence to adopt it- via Skype of course!! Ian- would love to go to this convention some time but in the mean time thank you for continuing to show our faith is not misplaced and this is the future.

  10. “For example, Riskalyse showed a one-click fiduciary solution, which can rebalance a client’s portfolio, including all the trades, in seconds. It seriously made me question whether the current FCA client money rules are actually operating against the interests of the consumer.”

    Not if they discourage pointless churn for its own sake.

  11. Great article
    Agree very useful ‘ice breaker’
    Some people will always be reticent to letting a stranger into their home and those who come to the office are almost an agreed arrangement – how many have we lost With out the ice breaker

  12. Julian Stevens 8th March 2017 at 1:10 pm

    I visited my most important (and profitable) family of clients yesterday and we discussed a wide range of issues, not least looking at and my offering comment on assorted items of correspondence and statements of which we don’t hold copies.

    We completed a couple of forms for their latest ISA top-ups, they wrote a cheque to the provider in question and then I took them out to dinner over which we discussed a wide range of other subjects, mostly un related to the business for which I’d visited them. All in all, it was an extremely convivial evening.

    Is it just me or might all this have been rather difficult to accomplish via a computer link?

    • Perhaps the answer is that it’s down to personal preference. Personally I always enjoyed the client contact and believe they did too. However, for those clients and advisers that don’t, this is an alternative.

      Separately, Ian states in the article “MoneyGuide Pro presented some interesting research it had undertaken with consumers aged between 50 and 70 into how they prefer to receive advice…
      The results strike at the heart of conventional wisdom in our industry. Indeed, it found clients would rather deal with their advisers via a screen-share than at face-to-face meetings…
      these findings come from real consumers engaging in the advice process and are measured using the latest scientific techniques.”

      What exactly were the circumstances of this ‘research’? Was it independent (doesn’t look like it)? How were ‘clients’ chosen, and how were they prepared for the testing? Extraordinary claims require extraordinary evidence…

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