Plotting a good course in a sea of uncertainty

First off the bat, I have to say that – while the economic situation for the UK in 2023 looks uncertain, and we can but hope the lurches we experienced last year are firmly in the past – there is a fantastic opportunity for the financial services industry to support individuals deserving greater clarity in their financial plans. Yes there are risks from recessionary pressures and persisting inflation, but as with all periods of uncertainty, these times serve as a reminder of the real value of advice provided to clients by calm and reassuring professionals.

I’m anticipating a continued push to automate the advice process, through the implementation of hybrid solutions that blend digital and traditional approaches, as well as purely digital systems that can direct consumers towards the more straightforward products (e.g. ISAs and GIAs). Everything of course depends on the complexity of advice being given and the characteristics and inclinations of advice firms’ target segments.

It's not unique of me to believe that the advisers who will be most successful are those who can place the consumer truly at the heart of their proposition, supporting their clients across the various areas of financial planning by utilising the most appropriate and fruitful channel for delivering the firm’s service successfully and profitably.

Consumer Duty implementation, coupled with the FCA’s thematic review of retirement income advice, will most certainly result in greater scrutiny of both the advice process and the ultimate outcomes for retail investors. However, this provides a great opportunity for firms to review and evolve their offering to meet the regulator’s standards while simultaneously striving to provide great service in their market.

Evolution in advice delivery is inevitable. Technology has a big role in improving efficiencies within the sector during 2023 and beyond. An obvious step will be integrating and harmonising IT systems to reduce the need for multiple manual interventions. But this in itself is not transformational in lowering costs. A step change in costs for firms will be achieved if investors can be encouraged to do more for themselves, especially at the outset of the relationship, and so reducing the burden on advisers and their support staff and ultimately driving down the cost of giving advice – improving the margin for firms.

All told, changing how people interact with financial products and services will be the real driver of a transformational improvement in servicing clients profitably in less time and, for some, serving more consumers in the same amount of time. With adviser numbers relatively stable, this is important for all those in the UK with the means to invest. The adoption of technology and more automation gives me optimism that we are moving in the right direction.

Advisers know their business and their clients best, but the start of a new year can be a good time to ask yourself a few questions about the service you are providing now and how you want it to look in the future:

● How does our current service stand up against the regulator’s aims?
● Does our market offering genuinely put the client at the centre of the proposition?
● How can we differentiate our offering versus our competitors?
● Can we help a retail investor access digital, hybrid or traditional advice depending on the advice they need and the desired level of support?
● How can we future-proof our business to ensure younger individuals become clients in the future?
● How can adopting automation and moving to digital or hybrid advice help to increase our market share or reduce our costs?

Considering and answering these questions should help to keep minds focused on the challenges across financial services, and all of us in the sector have the opportunity and the responsibility to do all we can to facilitate people to take the right steps towards a future of financial security and comfort.