There’s a misconception that technology, innovation and automation are threats to traditional, personal face-to-face advice models.
But the reverse is true. Digital technology has the potential to make advice more personal.
With automated technology, advisers can collect an unprecedented amount of valuable client information and analyse it quickly to discover what’s really going on in a client’s life.
That enables advisers to have targeted conversations and address key issues quickly, upfront.
Advisers can trust the insights and conclusions they pull out of the data because the inputs are accurate and up-to-date. This is markedly different to the findings from generic online questionnaires, which rely on people to estimate their income, expenditure and wealth, and rate their own level of financial literacy and understanding.
Personal financial management software automatically gathers clients’ account balance and transaction data from all sources, allowing the adviser to gain a deep understanding of financial position, lifestyle and money management ability.
With that intelligence, advisers can develop a tailored advice proposition and strategy, which may include expense management, debt reduction and a disciplined savings and investment plan. This information also enables advisers to determine whether an individual is an ideal client for them from the beginning.
From a client’s perspective, they feel heard and understood. It’s clear that their adviser has made the effort to understand their situation, evaluate their needs and develop a personalised strategy that is in their best interest.
Money management maturity
An efficient way to deliver personal advice can start with a handful of generic service packages, which sounds counterintuitive but it provides a solid platform to build on and avoids the need to start from scratch each time.
For example, advisers who want to offer personalised advice on savings, budgeting and cashflow management must first determine a person’s goals and objectives, and then their money management ability, or level of maturity, in order to develop a plan that’s relevant and realistic for them.
A simple but effective way of doing that is to create a series of broad, high level categories and corresponding service packages.
The categories may simply be called A, B, C and D or they may have more creative names to describe the different stages of maturity such as impulsive, disciplined and experienced.
At Moneysoft, there are three money management maturity levels: unruly, responsible and mature.
But bear in mind that people rarely fit neatly into one bucket. That is why tailoring is critical.
People don’t want off-the-shelf advice
Furthermore, consumers increasingly expect and want customised solutions. Consider the popularity of modified cars, made-to-measure clothes, hot stamping and monogrammed accessories.
People don’t want to be sold an off-the-shelf strategy. They want a solution that’s meaningful to them and that will deliver improved outcomes.
Advisers can leverage insights gained through automated technology and use their skill, experience and professional judgement to quickly develop a tailored service that meets their client’s individual needs.
For an impulsive client that may look like continuous monitoring and coaching, including scheduled phone and email contact, proactive calls when the client gets off track and incentives for achieving agreed goals.
As clients get better at managing their financial affairs and their level of money management maturity improves, the service and advice they require evolves. This natural evolution provides the adviser with a means to continually engage and refine while maintaining their role as a provider of professional advice throughout the client’s lifetime.
If the potential market for advice was depicted as an iceberg, the visible tip of the iceberg or advice-berg would be high net worth investors and/or high income earners with sizeable wealth to grow and protect.
The mass underneath the surface would be a hotchpotch of everyone else.
Ultimately, professional advice is about helping people make smart financial decisions, coaching them to stay on track to achieve their goals and objectives, and getting them to a point where they have surplus cashflow to invest and a meaningful portfolio to manage.
As a client’s personal needs evolve, advisers need to expand the services they provide, demonstrate the value they add and deepen the relationship. That challenge can be successfully met by continuously incorporating auto-generated client insights to build and refine tailored propositions.