Research and Development in Financial Advice

magic robot

The Financial Conduct Authority has published the results of its survey of firms providing financial advice. The results make for depressing reading.

Of the sample, 72% of firms said that customers’ preference for personal interaction with an adviser was a ‘very important’ or ‘important’ barrier to providing automated or technology-supported advice

The FCA were seen as part of the problem

In terms of very important barriers to providing ‘mass market’ advice, the majority of firms (63% and 61%, respectively) stated regulatory factors, such as fees and levies, and the cost of compliance with FCA rules and reporting requirements

and the FCA found

A relatively small proportion of firms (11% or less) expected that, over the next year, they would increase their mass-market, low-cost advice proposition or the provision of generic advice.

As the Irish joke has it,

“if you’re looking to go there, I wouldn’t start here”.

Supply side/buy side – not exactly aligned!

Have a look at this infographic , taken from a YouGov survey commissioned by People’s Pension earlier in the year.


The news for pension advice is not encouraging. At best advisers are being used as a “Shop and Go” service , at worst they are ignored, very few customers return for regular reviews,

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Infact Pensions with 36% attracts less interest in financial advice than mortgages where 46% of the 2000+ surveyed said they’d taken advice.

Financial adviser’s face to face service, for all their protests (see above) is not as popular as the advisory websites such as

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Research and Development

When I go into offices of my company, actuaries are keen to show me financial modellers which they are developing in their own time, and turning into apps. We fire Survey Monkey surveys between us asking what we think about all kind of financial matters and the results are turned into ideas that drive our financial education programs.

The Pension PlayPen is an example of what happens when an advisory firm, such as First Actuarial , empowers staff to develop technology suitable for the mass market of consumers (in PPP’s case the 1.8m employers staging auto-enrolment).

In my opinion, the drive to deliver mass market advice, the holy grail FAMR is seeking, won’t just come from a top-down approach from Government, but from the bottom up.

The people (like me) who have been allowed in our firm to play with the new technology, are some of our most committed and exuberant employees. Not only are they driving forward the direction of our company, but they are profit producing in everything else they do.

Re-addressing the balance; developing on-line help

The YouGov/People’s survey did not paint a black and white picture. Clearly many people are not going to take advice from machines and the “strongly disagree” element of those surveyed suggests that many never will!

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However, if I was investing into financial advisory businesses right now, I would see the needs of the greens less served than those of the reds.

Firms that are investing for the future in delivering to the mass market using technology have a bright future if they can turn this latent need for on-line help, into a lasting revenue stream.

£Screen Shot 2016-04-29 at 07.19.10.png

As with social media, monetising the tools delivered for free is the hard bit, but as with social media, daring to innovate and capture the eyeballs of ordinary people, has the greatest potential.

“Innovate or die”

I cannot see a great future for financial advisors unless they can innovate, re-connect with the mass market and be seen as good for society in general.

Most of the R and D in this area is not coming from advisers but from asset managers, insurers and banks.

The average of an IFA in the UK today (according to the FCA) is 58. I fear many will die before they innovate.


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in pensions, robo-advice and tagged , , , , , , , , , , , . Bookmark the permalink.

5 Responses to Research and Development in Financial Advice

  1. Brian Gannon says:

    Hi Henry

    You may well be right in that we will die before we innovate. Here’s the thing though. Robot advice is not going to be interactive without years of development. Software companies and actuarial practices can develop algorithms financial advisers can’t. We have soft skills. We inspire clients to take ownership of their retirement and we provide the guidance knowledge motivation and inspiration for clients to achieve their goals. Bad regulators like the FCA stifle the innovation by creating layers of rules and guidelines that prevent mass market clients being serviceable. Adviser firms generally have turnover of only a few hundred thousand pounds a sizeable proportion of which gets eaten up with administration and compliance. If we had a good regulator they would stop preventing progress by understanding that their rules and regulations have not protected consumers at all. They have simply eliminated access to advice. That is I guess a former of protection. No need to protect consumers if they aren’t consuming. We have a self serving pompous regulatory body that tells itself they know best. They don’t consult they just collect information and fit it into their previous existing proposed amendments. To invent is free but to innovate requires a profit for all that effort. The cost of the service I can provide is too high for it to add value to low net worth individuals and a large reason for that is regulation. I cannot give pro bono advice down the pub I cannot do anything specifically helpful to a private individual without backing it up with a suitability report. It’s a joke. The surveys they produce to back up their policies are often targeted at people who have never had advice. What’s the point of a survey where the consumer is asked their opinions on something they have never experienced? It’s like asking a blind man if he finds the wallpaper in the bathroom pleasing to the eye. He knows what a bathroom is he knows what wallpaper is but he s never actually seen either. All this theorising is maybe good for the soul but anecdotally the FCA is a failure. Empirically they are a failure. The Cost of providing advice is higher than its ever been. Therefore access to advice for the man and woman on the Clapham omnibus is lower than it has ever been. We aren’t geniuses we are financial planners. We won’t be generating any robo toys. That’s for you guys to try and produce. There are so many good ideas out there but we have arrogant detached ill informed regulators who think they need to educate advisers how to be ethical and to tell us what our clients need. A rubbish system leads to rubbish outcomes. I think advisers do a brilliant job for the clients we have and it is a source of regret that the clients we can’t afford to help are left to flounder and work stuff out for themselves by listening to bbc lunchbox and trawling

    • henry tapper says:

      Financial planners can be geniuses!

      You lot need young blood and you have to invest in succession. You are – as a rule- under-investing both in training new advisers and in building new technology. Part of this is the fault of the system but what really annoys me is the amount of money wasted by advisers on nonsense- everything from golf days to platforms, most of which is nothing to do with advice and everything to do with immediate gratification.

  2. Brian Gannon says:

    Hi Henry, you are working for a firm of actuaries, and what really annoys me is that although your heart is in the right place your head is much lower down closer to another part of your anatomy sometimes. Young blood with genius is best advised to work in an industry where regulation will not destroy their best efforts. You work for a firm whose charges are massively in excess of what advisers charge. building in fat based on timesheets which charge very high hourly fees. You are a great blogger, and you challenge my thoughts and make me look at the opposite side of opinions, and that is great for expanding my mind and you inform me with lots of views which I have not considered before I joined your blog. However, you also espouse opinions which are based on your past experience of being an adviser, in an era where things are very different to now. You are ex Eagle Star, a previously massive company. One which designed and sold some awful products by the way. And which used awful advisers to flog their awful products. Most IFAs now have less than 5 regulated advisers, and employ only a couple of back office support staff. All advisers who are regulated are now highly qualified or else have stopped practising. I am not disagreeing about the need to develop robo advice at all, I think its great if people want to have those products. What I am saying is that advisers cannot develop these services, it needs the actuaries and providers to do this and then make this technology available on a generic basis. We need a Tim Berners-Lee benefactor to develop these financial tools and make them freely available to the general public. And surely if we were to compare the occasional game of golf with the time, cost and energy consumed by your attendance at Cheltenham and going to the Henley Regatta, then I would be more annoyed? You went to Eton and associate with those regulators I criticise, and work in a firm that charges massive fees compared to those charges made by advisers, so maybe your perspective is different to mine. I am an adviser, I don’t own the company which employs me, I simply care about the consumers who are not getting a good deal from the industry, and I speak directly to and advise my clients, and also speak to hundreds of people who are not my clients about their futures. I listen to your opinion but are you listening to mine with open ears or simply working out how to disagree with me?

  3. Phil Castle says:

    I agree Henry, but if the average age of an IFA is now 58, then innovation is of no interest to the adviser. I am 51 so maybe for me there is a point as I’ll probably work part-time in to my late 60’s early 70’s but I need to talk innovation with my 25 year old staff members so they have a future career and business advising.

  4. henry tapper says:

    I think that if IFAs want to plan their succession, they have got to find and promote people within their practices who can embrace the new technologies- even if they find it hard to do so themselves!

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