Ahead of his appearance at Money Marketing Interactive in London on 3 May, former Standard Life business services head Innes Miller looks at how technology can improve the advice process, and why percentage charges are stalling professionalism.
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On a scale of 1 to 10, how optimistic are you about the advice market for 2018?
8. Demand for advice will continue grow, not least as we move into a period of economic change driven by rising inflation and interest rates.
What can be done to improve the supply of advice?
Through technologies such as blockchain, the advice process will become more efficient with key tasks being performed using automation and artificial intelligence. This will lead to improvements in productivity, enabling advice to be delivered to a greater number of people without any human intervention. Advisers will be able to support more clients than they can do today.
We also need to see new market entrants, players that can deliver advice to currently underserved parts of the market in a highly cost effective and engaging way.
What is the best innovation you’ve seen recently?
Edinburgh-based start-up Lightbox Reward has developed a digital communications platform for employee benefits that addresses many of the issues that prevent employers delivering the full value of the benefits packages on offer. It’s simple, cost effective but very powerful.
Have advisers reached a point of true professionalism yet?
Some have reached a level that we could describe as true professionalism whereby they are viewed as peers by other professionals such as accountants and lawyers. However, while they are growing in number, they remain an exception to the rule. Moving to the Australian model whereby advisers should be qualified to degree level would be a step in the right direction, as would breaking the link between and advice and a product sale, i.e. banning charging on a basis point basis.
Will ad valorem charging stand up to recent criticism?
The days of ad valorem charging are numbered. It diminishes investment returns, encourages the wrong behaviours and allows issues such as cross-subsidisation and conflicts of interest to persist. Advisers seem almost fearful to let go and move to a fee-based model which might be more expensive to administer, but allows clients to pay a fee that’s more in line with the service they’re receiving.
How long will the DB transfer market boom continue?
Port Talbot has highlighted the risks and I think the general public will be more cautious about whether or not they transfer. This combined with rising interest rates leading to less attractive transfer rates could see a slowdown.
What major trends are you predicting for the next 12 months?
The savings and investments market will continue to consolidate across advice, asset management and life and pensions. Technology will play an ever greater role in the advice process, rob-advice will continue to evolve as will hybrid models combining digital and human capabilities. The advice sector may also be hit by further ‘brand damage’ caused by the Port Talbot pensions transfer debacle.
What session are you looking forward to most at MMI?
Winning the next generation of clients. A different approach will be required and it will be interesting to hear what is required to deliver success.
How important is it for the advice community to share best practice?
Peer-to-peer learning is an essential part of business management. People at all levels within organisations can learn by sharing. Common problems can be jointly solved, providing a valuable opportunity for action learning.
How can advisers best improve their image with the public?
Unfortunately, there’s a small minority out there who consistently tarnish the image of the sector. Firstly, the regulator needs to take tougher action to identify and permanently remove these individuals from operating. Above this, it’s about being honest, transparent, delivering value for money and ensuring that clients are not placed in investments (such as Ucis) that are not aligned to their needs or risk profile.
What’s been your proudest achievement at your firm this year?
I’m currently part of a workforce data analytics start-up and our aim is to help the financial services industry recognise the value and benefits of diversity in their organisations through data and measurement. During the past three months we have established ourselves as a trusted source of analysis and comment in relation to gender pay gap reporting and have been featured regularly in the FT and BBC.
If you could scrap one piece of regulation, what would it be?
Perhaps not scrap, but add: I think all collective investment schemes should be regulated.
Who is your advice market hero?
I’m always pleased to see individuals who are looking to bring something new and fresh to the market that delivers improvements for advisers. Although I don’t know her, I recently read an interview with Cathi Harrison and she has an inspiring story to tell. I feel that she’s already achieved some great things and appears on track to be a stand-out entrepreneur in the sector. I wish her all the best.
What’s your favourite tech tool?
It has to be my Apple Macbook Air. Its light, robust and travels with me wherever I go.
Who would be your perfect client, and who would be a nightmare one?
A perfect client is someone who trusts you and is open about their circumstances. A nightmare one is someone who pays too much attention to detail, has too much time on their hands and questions everything.