Who is the most important writer in Money Marketing? Don’t worry, I know I’m way, way down the list in that respect. No, if I had to make a choice, I would come up with two names.
One is Tony Wickenden for his informative articles on tax-related matters. As for the other person, before I name him I first want to tell you a story.
About 15 years ago I was sent a detailed piece of research about the internet by Pearl Assurance. The study, which ran to dozens of pages, attempted to set into context the already evident expansion of internet use among the UK population at the time.
I no longer have the document in question but my strong recollection is that while it acknowledged the growth in numbers of people going online, it also pointed out that there was a massive gap in usage among certain social groups, particularly manual and unskilled workers – Pearl’s customer base.
Very few of them owned computers, the report noted and insofar as their children had access to the internet during school hours, once they got home they tended not to use the web for any purpose, social or otherwise.
Pearl’s document was part of a carefully-structured argument to the effect that assumptions even then about the internet’s potential to replace many of the functions of face-to-face advisers were premature at best.
While Pearl was careful not to say that this would remain the case for all time, it clearly believed demand among customers for its small army of salespeople would continue for years to come.
Barely two years later, Pearl’s parent company AMP sacked its entire 1,000-strong salesforce. Meanwhile, Pearl itself has been through a bewildering number of sales and restructurings over the past 15 years and its remaining funds under management are now part of Phoenix Life.
And what of the internet itself? It’s doing rather well, in contrast. According to the Office for National Statistics in August last year, 36 million adults in Britain – 73 per cent of the population – were accessing the internet every single day. That figure is probably even higher now.
The younger you are, the more likely to go online. Almost all adults aged 16 to 24 years (99 per cent) had used the internet. For 25 to 34-year-olds, acess is used to carry out a wide range of established everyday activities, such as purchasing goods or services online (92 per cent), banking (76 per cent) and selling goods online (45 per cent).
The point of this story is that rather than express amazement at comments such as those from the FCA’s Martin Wheatley, who told a Treasury select committee at the beginning of this month that “financial products can be sold online on an advised basis with no human intervention”, IFAs ought to be thinking really hard how to implement what he said.
Even more significant was Wheatley’s subsequent answer to TSC chair Andrew Tyrie, who asked if it is possible to offer advice without human intervention. Wheatley replied: “yes”.
When I have written about this in the past, the majority of responses have tended to be similar to those of Pearl Assurance’s report 15 years ago.
Last week, they were even more dismissive. “Utter rubbish”, was one comment at the bottom of Money Marketing’s story, ironically published online. “Incredibly imbecilic”, was a second remark.
Another person suggested that if we followed Wheatley’s logic doctors should be replaced with Game Boys, which leaves me wondering if the poor man has ever heard of NHS Direct, which uses a combination of online and telephone-based assessment and triaging of potential patients, saving the health service millions each year in unnecessary GP call-outs.
Even advisers who acknowledge the growing relevance of the internet to financial information-gathering and decision-making tend to see themselves as physical intermediaries within the online process. In other words, they assume a client is almost incapable of making financial decisions without a reassuring corporeal presence to guide them.
I will stick my neck out here but I actually do not believe that is true. Or rather, it may be true for most of my generation: 50somethings and those older than me. It is certainly less true for those in their late 30s and 40s and, my gut instinct tells me, is highly unlikely to be the case for increasing numbers of 20somethings.
Yes, they may want to pick up the phone and confirm certain aspects of the online advice they receive from time to time. If there are highly complicated issues to address they may even request a meeting with an adviser.
But in another 15 years’ time the idea of face-to-face advice as practised by the majority of IFAs will be seen as an anachronism. Either that or advisers will miss out on a historic opportunity to reach the millions of people they complain are victims of the so-called “advice gap”.
Which is why for me, apart from Tony Wickenden, whose copy I always try to struggle through, the other most important writer in Money Marketing is Ian McKenna. His report on last week’s European Finovate conference in London was inspirational.
Trust me on this: if IFAs fail to make use of McKenna’s ideas and experience now, they will regret it in 10 years time.
Nic Cicutti can be contacted at firstname.lastname@example.org