Tech averse advisers risk ‘losing pension freedom market share’

Advisers who shy away from using technology will lose out in the race to provide pensions freedom advice to more tech-savvy IFAs, delegates at the Intelliflo conference heard. Jenna Towler finds out more

There has never been a better time to be in financial advice, but IFAs who fail to embrace technology will lose out to more tech-savvy firms in the race to serve pensions freedom clients, experts have said.

Speaking at the Intelliflo conference, Alexander House Financial Services chief operating officer Jane Hodges said, “old fashioned advisers” who fail to take advantage of available technology were under threat.

She also said the sheer number of people who will need retirement income advice due to pensions freedom means IFAs need to think differently about how to use their skill set to help the maximum number of clients.

The panel debate, which focused on pensions freedom and advisers’ use of technology, asked if technology was a threat or an opportunity to advisers.

Hodges said: “If you are an old fashioned adviser who does all of their business face-to-face and via paper then it is a threat to you.

“There are lots of models that are coming through from abroad, from America, that are all using different technologies. We are an organisation that has no offices. I have not sent a piece of post in years.

“Companies that thrive on technology are going to take over the world. Anyone who doesn’t will have a much smaller business and a much smaller target market.”

Value add

The conference featured a keynote speech from Microsoft chief envisioning officer David Coplin who outlined, in his view, how humanity had actually made working life harder through tech.

He also spoke on the panel debate and cautioned against overreliance on tech by advisers.

“There is a baby with the bathwater consideration here. It is not all about technology. You should not confuse the value of what you provide with how you provide it,” he said.

“Technology is really about the democratisation of information, giving everybody equal access to information.

“So in a world where your clients have access to the sort of information that only you had access to a few years ago what is it that you are going to do to build value on top of that? That is the bit the client wants to know.”

Institute of Financial Planning board member Chris Williams agreed it was important for the profession to “understand exactly what it is that we do as advisers”.

He said: “We provide validation and reassurance, we simplify the complex. That is the value that we provide. We should make sure we use technology to help us do that even better but we shouldn’t try and replace the value that we offer with information.

“We should not be regurgitating information to clients we should be trying to help them understand it and help them make decisions.”

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The panel agreed pensions freedom was a huge opportunity for financial advisers to help more clients.

Hodges said: “This is a massive opportunity. You have got a government out there that is trying to encourage saving and the coalition government, you have auto-enrolment.

“I just don’t see how you could not want to be an adviser in this world. There are millions of clients out there that need our help and advice.”

Supply and demand

Intelliflo executive chairman Nick Eatock added: “I do not think there has ever been a better time to be an adviser than right here right now. There are challenges and obstacles to overcome but the opportunities are really significant.”

He also said there was a problem with the supply of advice versus public demand but questioned if technology alone could solve the problem.

“If we change the dynamics then maybe the current number of advisers is enough, maybe. But I suspect it won’t be.

“If you look at areas like pensions freedom the number of people – clients and potential clients – that need advice of some sort has just grown and grown and grown. I suspect we will need to bolster up the number of advisers.

“I certainly see a growing demand for financial advice. There is a growing argument to suggest that the accumulation stage will be delivered by more mass-market opportunities but the decumulation stage is ripe and ready for advisers.

“Everyone goes through that stage.”

Hodges added: “Every single person in the country should be looking at their savings because of pensions freedom.

“The pension has suddenly become an excellent form of savings that you can access at a future date. There are all sorts of reasons why pensions freedom has opened up opportunities for people to speak to an adviser.

“I think we are going to be inundated in the next few years by people looking for help.

“But the community is getting smaller, we have got to cleverer about how we use our skills and our knowledge to make sure there are people out there – the highly qualified advisers – can spread themselves further. That is why technology is absolutely vital, we have to use it really well.

“Somehow we have to figure out how to use the time of a highly qualified adviser and make sure people get access to you [the adviser] in the right way.”

The IFP’s Williams said there was an “obvious” problem with supply.

“The average age of advisers is 46, we are not getting a huge amount of new entrants to the industry, I would probably expect [adviser numbers] to contract. Whether that is actually a problem will depend on how the industry develops and what the demand looks like.

“If the demand continues for advice being delivered in the same way that it has always been delivered then there will be an issue with supply.

“If the demand changes, if we are engaging with our customers in a different way – providing advice online, digitally, and remotely then we have got more than enough advisers. That is where the demand and supply argument becomes interesting,” he said.

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