By Alex Kerry, head of Winterflood Business Services
What can be disrupted will be disrupted. This is the universal law of innovation and it is a concept the financial services industry will have to embrace as technology rapidly transforms the saving and investing landscape. Over the last decade, the industry has undergone profound regulatory change and clearly has to reconsider its relationships with investors. The industry has realised it needs to provide more clarity on products and services. Consumers also need to believe their wants and needs are being addressed.
Against this shifting landscape, there are five key trends adviser platforms, wealth managers and financial advisers must consider: The customer experience: When we consider customer experience, it is important all segments of the market are represented. While millennials are seen as the first techsavvy generation, we must not forget about the underserved Generation X. Like millennials, Generation X prefers mobile and digital interaction and is comfortable transacting online. These people will increasingly also look to interact with financial advisers in this way.
Portable data: Poor access to financial data impedes a consumer’s ability to make informed decisions. It also makes the advice process laborious, as advisers need to spend large amounts of time compiling ata. The Treasury's Pensions Dashboard prototype will be ready by spring 2017, with an official projected launch in 2019. However, we believe the industry will begin to bring its own data capture solutions to the table.
Best-of-breed solutions: Much of the industry is run on old technology still requiring manual entry, which ultimately increases costs for clients. Collaboration with cutting-edge tech providers will allow wealth managers and new platforms to drive greater efficiencies and deliver cheaper solutions to clients, while creating seamless straight-through processes. Adopting a best-ofbreed approach and creating a fully automated service allows advisers and wealth managers to stay at the forefront of platform innovation. It also allows firms to concentrate on the front-end, client experience and investment strategy.
Rise of fractional shares: DFMs are increasingly selecting ETFs for use in model portfolios, as aggregated trading can help with the trading costs, particularly when it comes to rebalancing. We are seeing DFMs increasingly put pressure on platforms to provide fractional dealing to ensure more efficient trading.
Ongoing education: It is pleasing to see many of the innovative entrants into the market offer tools to help educate, nurture and encourage. For example, Wealthify’s interactive ‘myth buster’ tool helps dispel common investing misconceptions, and its onboarding journey incorporates intuitive sliders with visual tools that help explain how potential volatility can be linked to an investor’s risk choice and time horizon.