Personal finance goes digital. How ready are you? - October

Financial Advisory

Emily Landless

AdviceDigitalEngagementExperienceFinancial AdvisoryMobileWinning Advisers

Personal financial management is on the cusp of a fundamental transformation. For many years, the traditional face-to-face advisory model has provided a service to the minority of the population who can afford it. A confluence of factors including regulatory change and technological progress are now combining to enable a new means of customer engagement. With banking services slowly but surely moving towards being mobile-first, digital innovators have wealth management in their sights as an industry that is ripe for disruption. Meanwhile, a shift in pensions responsibility from the corporate to the individual and the rise of the gig economy has put retirement affordability, and more generally personal financial wellbeing firmly in the spotlight. While traditional financial advice remains unattainable for most, a suite of digital products and services are being developed to fill the gap. Disrupt or be disrupted- attempts to create new, viable business models for the digital age will flounder unless people and organisations are willing to disrupt themselves.


  1. If the UK DC market was looked at in the same basis as DB, it would only be 17% funded
  2. It is anticipated that £750 billion will move out of DB schemes over the next five years creating a potential explosion of advisory work given the complexity of pensions
  3. There is a shortage of advisers and far too many people cannot afford advice but lack the financial education to do their own financial planning, many advisers only focus on clients who are already high net worth - the advice gap
  4. Technology can help advisers interact with more mass affluent customers in a cost effective manner
  5. Robo advice is used heavily by consumers in many other sectors e.g. shopping, booking holidays or insurance but the financial advice industry has been a slow adopter

Key issues and challenges:

  • Banks are starting to invest in technology to offer wealth and financial planning services to their mass affluent clients (e.g. Lloyds and Santander)
  • Next generation millennial/Gen Z clients are already embracing digital change and want this when it comes to financial planning and investment – comparatively the older generation (which includes most advisers) resists digital change
  • Using digital tools can dramatically improve operational efficiency and drive down costs (e.g. the cost of advising on a DB/DC transfer may fall from c£2,500 to £300 per cases over the next five years)
  • The work of many paraplanners will be redundant if digital solutions are used  to undertake administrative tasks (e.g. writing fact find summary reports, investment section recommendations etc)
  • Scepticism that new digital solutions actually work on an industrial scale in terms of integrating with the personal provision of financial planning advice is a major barrier to digitalisation
  • Speed of technology change can lead to early obsolescence for early adopters and there is a question as to how much demand clients have for the latest digital idea (note the record industry – vinyl, tapered CD, MP3, Spotify and now back to vinyl)

Conclusions and solutions:

  • Financial planners cannot ignore the immediate need to embrace the digital era for attracting next generation clients, dealing with costs pressures, driving operational efficiencies, reducing advisory risk and  improving the quality of client interaction
  • The squeeze on pricing and hence profit may become the main accelerator to more firms adopting new technologies sooner rather than later
  • Those firms coming up with digital solutions needs to overcome scepticism of financial advisers in terms of relevance, quality and cost/benefit analysis

Expert: Simon Binney - Wealth Wizards

Facilitator: Richard Clarke - Independent Consultant