Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .

Technology

Can technology help to reduce the UK savings gap?

DanielHarrison1

Against a backdrop of economic uncertainty in the EU and little growth in the UK, , Daniel Harrison, Senior Partner at True Potential explores the current savings gap and how technology can be used to engage investors and add value to IFA services.Daniel Harrison

The FSA’s retail distribution review (RDR), introduced on the 1st January this year, was drawn up with the aim to bring transparency to the relationship between the investing public, their independent financial advisers and the financial product providers. The biggest change introduced is that investors now have to pay their IFA for the advice they receive, either upfront or through a visible commission on the investment.

In light of the RDR, the appetite for using a service which is no longer viewed as ‘free’ could decrease. A report by Deloitte estimated that 24 per cent of investors would be likely to reduce the number of times they use an adviser.1

One of the real worries is the negative impact this would no doubt have on the UK savings gap, which is already at an all time high. Europe’s pension savings gap is currently estimated at €1.9tn, with research suggesting that the UK, France, Germany and Spain boast some of the largest shortfalls of the western European economies.2

It is estimated that as a result of the RDR, 5.5m potential investors might find themselves disenfranchised and unwilling to seek financial advice. These customers, who account for 11 per cent of UK adults, will represent a significant post-RDR advice gap.1

Previously employees may have been able to access financial advice via their employer’s financial adviser, accessing valuable information about the importance of saving and meeting their financial needs. Educating individuals is one of the things that financial advisers have been doing well for a very long time and the RDR may unfortunately have an impact on the uptake of such advice unless something is done to engage and encourage potential investors.

As IFAs begin to introduce charges for their services, it has become more important than ever for them to show added value and competitor differentiation to potential customers. The use of technology to do this should not be under-estimated. According to Ofcom, tablet ownership has jumped from 2 per cent to 11 per cent during 2012, while two fifths of UK adults now own a smartphone.3 IFAs should adapt to changing consumer behaviour and employ wealth management platforms that suit an investor’s lifestyle and enable them to access finances on the go.

The True Potential Single Integrated Wealth Platform is designed to empower investors to take control of their finances and also assist financial advisers by adding value to the advice process. Investors are able to effectively manage their relationship with their adviser by communicating through the platform as often or as infrequently as they require. The platform allows investors to monitor and amend their personal investment activities in a way that is engaging and interactive and fits into their current lifestyle. Such technologies therefore have the potential to bring new savers into the system and help to bridge the investment gap.

Online platforms also offer greater transparency to investors, which is essential to ensure trust and demonstrate compliance with the regulations within the RDR.

Using technology such as online wealth platforms, administration can be reduced, which means advisers are able to offer an improved service with more time to spend with clients. When combining the extra complexity of exams, new reporting and compliance requirements that have come into effect with RDR, this is even more important as workload and administration has increased dramatically.

To conclude, the RDR will improve the professionalism of IFA conduct but it does not seem to work hand in hand with wider policy direction. The current savings gap is a major concern, particularly as life expectancy continues to increase, and this is creating a need for advisers to add value to their services in order to reduce the number of disenfranchised investors choosing not to seek advice.

References
1. Bridging the advice gap: Delivering investment products in a post-RDR world, Deloitte. http://www.deloitte.com/assets/Dcom-UnitedKingdom/Local%20Assets/Documents/Industries/Financial%20Services/uk-fs-bridging-the-advice-gap.pdf
2. http://www.ft.com/cms/s/0/645d8c3e-60bb-11e2-b85b-00144feab49a.html#axzz2JN0EdtdK
3. The Communications Market Report 2012: United Kingdom http://stakeholders.ofcom.org.uk/market-data-research/market-data/communications-market-reports/cmr12/uk/

 

Global Banking & Finance Review

 

Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!


By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review │ Banking │ Finance │ Technology. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post