It has been an interesting few weeks for financial services since the Chancellor’s announcements in the Budget.
I was very interested to hear that pension providers will have to provide free guidance at the point of retirement for clients with a defined-contribution scheme. The Government has committed £20m over the next two years to develop this initiative and will explore with the FCA ways to make regulated advice more affordable, through more cost-effective delivery such as online channels.
Although many banks and product providers have closed their financial advice arms over the past few years, the importance of advice has not diminished. The Chancellor’s declaration of free guidance may encourage banks to look for more effective and forward-thinking ways of providing advice.
The industry has long debated the importance and value of face-to-face advice. Many say this route serves the customer best, with the trusted relationship aspect being the key element of professional advice.
In practice, it is likely that there will be space for both face-to-face advice and digital advice in the future. This is welcome news, given that we have seen the number of financial advisers decline over recent years due to departures from the profession and insufficient new blood. This has left us with a big dilemma of how to best serve the needs of future generations of consumers, particularly in the pension advice arena.
Of course, this also begs the question of what future generations will look for and value in the advice offered to them.
Much has been written about millennials and how they differ from previous generations, particularly in the way they embrace social media in respect of both their work and social interactions.
I was interested to read about some US research which found that more than half of millennials do not perceive any difference between one financial institution and another. Moreover, 33 per cent believe they will not have any need for bank branches within the next five years, which further emphasises the shift towards digital offerings.
At the Financial Adviser School, we see every day how our students live through technology and how effective it makes learning, communicating and working.
That is one of the reasons why we adopted a blended approach to learning, whereby 75 per cent of our programme is virtual and 25 per cent face-to-face. We believe this enables us to meet the needs of the individuals on the programme. In the same way as financial advice, it is important that the approach we adopt reflects customers’ preferences, needs and wants.
It will be a while before we can determine the impact of the Chancellor’s announcements. In the meantime, we should give some thought to the social and technological changes taking place due to the behaviours and preferences of future generations of consumers.
Lisa Winnard is HR director at Sesame Bankhall Group