The industry is constantly discussing the implications of automated advice but one area that has not had much attention is the potential impact it could have on adviser recruitment. Intelliflo’s recent white paper, Growing Your Financial Advice Business – the Hybrid Model, sheds some light on this.
The report says many advice firms are finding it is not feasible to grow their business by employing more advisers within a traditional face-to-face service model.
Firms looking to grow by increasing adviser numbers are up against a shortage of qualified advisers and, as such, those experienced enough to tick the
right boxes can be highly selective. Firms that cannot attract those advisers may struggle with the slow process of training unqualified or inexperienced staff to the required level.
The paper suggests a hybrid of automated and traditional face-to-face advice is the model of the future. Growth is achieved through long-term relationships with clients who progress from automation to full advice when their wealth increases and their needs become more complex. If this turns out to be the case, the opportunities and career structure for advisers could look very different.
Intelliflo founder and executive chairman Nick Eatock says: “Automation helps to bring advice to a level of customer that has not been able to benefit from it before. It makes advice more economic for both the adviser and the customer. The opportunity lies in giving customers access to an adviser who can help them with more complex issues that automation cannot deal with yet.”
Intelliflo’s report states: “The advance of technology, driven by client demand, offers an opportunity for a younger generation of advisers to cut their teeth in the industry with clients who want to start out with a light touch, automated approach to investment.”
So a clearer career path could emerge where trainee or newly qualified advisers initially gain experience with clients starting to upgrade from automated services. The newer adviser could then shadow a more senior one who deals with more complex issues, before gradually moving on to dealing with complex cases themselves.
Financial services specialist Heat Recruitment managing director Steve Preston says: “A lot of the work being done by trainee advisers could be done by automation, releasing the trainee to support senior advisers. While automated services may provide an efficient and cost-effective alternative to hiring advisers to handle smaller- net-worth clients or those with simpler demands, the higher-net-worth and more technical clients looking for a really bespoke service will want to be dealt with by a knowledgeable, personable adviser who can handle their situation with a personal touch. There will always be a place for face-to-face advice.”
Adviser view: Chris Daems, director, Cervello Financial Planning
Recruitment is a challenge and finding the best people to join our team takes time. However, most financial planning business owners I speak to believe recruiting the right people slowly is better than rushing towards growth with the wrong team.
I am an advocate of the “grow your own advisers” approach: recruiting young people and developing them. The report makes a fair point about the time it takes to recruit, train and support these team members but it is important to remember many of the business that aspire for longer-term growth are prepared to make this commitment.
The “hybrid” business model is a compelling way to build a firm. What the report seems to ignore, though, is that any automated advice offering needs time, effort, energy and potentially cash in order to build enough scale to be a worthwhile investment.
I am not suggesting automated advice will not play an important part in the market. It will. It’s just that a lot is involved in promoting such a proposition.