Industry commentators will have us believe that one major downside to RDR is that financial planning is no longer available to middle Britain. Nothing is farther from the truth. Financial planning; real financial planning has NEVER been available to middle Britain. In the pre RDR days, middle Britain got sold to; not advised. That’s what the banks and lifeco salesforces did and I’m not sure consumers are really mourning their demise
Then I read in the industry press several propositions being developed to close the so-called ‘advice gap.’ But let’s be clear, the answer to the ‘advice gap’ is not execution-only! And when I hear that yet another lifeco is building a ‘Direct-to Consumer’ proposition, designed to deliver ‘simple products’ to consumers, it sends chill down my spine. It’s the days of building a salesforce all over again, only this time it’s been done via robots, over the internet. It’s another mis-selling scandal brewing in front of our very eyes.
I also read about well-intentioned financial planners, looking to deliver advice at the cost of £50 an hour to consumers. Noble! Very noble! But it’s got the smell of a suicide mission all over it. Let’s face the fact, the days of experienced financial planners delivering face-to-face advice to Joe and Gill Average are over, for good. I doubt it ever really existed but that’s a discussion for another day. If you consider the fact that a typical annual review with an existing IFA client costs around £1400, according to a recent research by Clive Waller, then you get why this kind of propositions will not work. The sad reality is that, advisers who give full financial planning to clients on a one-on-one level can, will and must charge a premium. That’s just the way it is now.
So does that leave middle Britain with no access to advice? The answer is no! Technology will play a big role in delivering financial planning to middle Britain. Not by replacing the need for human adviser completely but by deploying technology to do what it does best – data gathering, analysis and visualisation, you can free up advisers to focus on what they do best; talking to clients.
The technology already exist to enable account aggregation, goal-based cashflow planning and tailored portfolios. Add to this, one or two hours of conversation with a financial planner over the phone/Skype/G+Hangout and you come up with a model that is far better than anything in the pre-RDR days.
Impossible? Well, it’s two letters too long. Take a look at LearnVest, over in the US. Powered by technology (and millions of dollars in VC funding), it delivers financial planning, including (limited) access to a CFP and tailored investment portfolio, all at less $50 a month.
So, rather than trying to build the next HargreavesLansdown, it’s this sorts of propositions that we need to develop – to deliver financial planning to middle Britain at the cost of a gym membership as well as serve as the breeding ground for the next generation of financial planners.