The appetite of ordinary people – especially older people, to get the information they want is insatiable.
This Sunday, my mother will chose which church service she “attends” from the live streaming of Wesley’s Chapel in London to the Zoomed service of Shaftesbury methodist church. Later in the day she will be joining her extended family to celebrate the birthday of her third son – probably on google hang-outs.
In the last fortnight alone, as millions fell into the grip of a nationwide lockdown, we have seen a seismic cultural shift. Through pure necessity, people in their 60s, 70s and 80s – are using tablets, video-conferencing and messaging services for the first time.
In every household, the battle against isolation is being waged as fiercely as our war with the virus itself, and the weapons of choice are almost always technology and a good internet connection.
As a result, we are seeing a global surge in digital adoption with online supermarkets, Netflix and Amazon among the many businesses cleaning up. Cash is increasingly viewed with suspicion at the local supermarket and homes commonly now have two or even three areas set up as home offices.
Financial advisers cannot immunise from digital
Financial advice is not immune to this cultural shift. Coronavirus has required social distancing but has brought us together on the web
Firms that can’t adapt to digital onboarding , fact-finding, advice and execution online will not just fail to grow, they will wither and ultimately they will compost.
Every aspect of the advisory process can find a digital alternative and while we may not be able to smell the adviser’s breath , the value of our money can stretch a lot further online.
How advisers generate new business must change
Firstly , the process of prospecting – which has shifted from cold-calling to digital lead generation must be radically overhauled. Paying for prospects by the promise of a service, backed only by a website, is not going to cut it for today’s digital customer.
Before people will trust advice , they need to have good reason. The currency with which prospects are attracted to advisers must shift from a flash promise to genuinely engaging content. Advisers who want people to come to them are going to have to reach their audience through demonstrating their expertise.
So look out for the new kind of “lead generation”, the organic lead generated from the fertile soil of a helpful web or phone application.
How advisers onboard prospects must change
I’ve questioned whether £1500 is the right price for onboarding a client and have been convinced by a number of good IFAs that it is.
But if the hidden cost of acquisition of a new client is £1500, then the adviser is going to have to bill £1500 to recover acquisition costs which cannot be justified by “know your customer”. I cannot think of any mass-market service that can carry that initial debt into “a lifetime of service” proposition. We cannot front-end load the cost of advice without protecting ourselves with SJP style exit penalties or demanding minimum assets from which to skim fees.
Unless an onboarding process can be developed which brings the cost of acquisition down below £100, financial advice will not be delivered beyond the 10% or less who currently choose to pay for it.
The threat from digital
Financial advisers cannot pull up the drawbridge on their existing clients and assume they have a self-financing business , capable of meeting fixed overheads and paying competitive salaries
The threat of digital is not only that it undercuts adviser’s new business prospects , but that it eats at its existing book.
So far advisers have managed to sell the face to face model as reassuringly expensive, but in a post-pandemic world, everyone from my mum to her grandson will be exploring ways to get help that work for them. And if adviser’s existing customers find that there is more value from moving firms – it is very likely they will do.
The threat from the new digital advisers is not just that they cut off the oxygen of new business, but they excise chunks of the body of business that pays the terrestrial adviser’s bills.
Financial advice will never be the same again and I intend to ensure that advice is better value, more accessible and more popular by facilitating digitalisation at every point.
The good news is that there is an untapped market of over 90% of the adult population of the UK.