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Daniel Harrison, senior partner at financial services firm True Potential LLP warns that advisers still failing to embrace technology will be ‘left behind’ in the post-RDR market.



With the introduction of the retail distribution review (RDR) in December 2012 came the requirement for advisers to justify their adviser charging agreements. They must do this by demonstrating that they are delivering their value proposition agreed with each client.

Post-RDR, the market place became more competitive as some customers took to DIY investing or even refrained from investing at all, to avoid adviser charges.

Research by Cass Business School revealed that following the introduction of the RDR, 43 million people would be unwilling or unable to access financial advice. True Potential recently surveyed over 2,000 Britons and while 34 per cent are currently using a financial adviser, one third of people are relying on internet searches to receive financial advice.

As well as challenges around justifying charging agreements to the FCA, preparing for the RDR meant ensuring the necessary qualifications were obtained. According to the Financial Conduct Authority (FCA), the number of individuals qualified to give advice under the new rules fell by around 20 per cent in the 12 months leading up to the changes.

The estimated number of financial advisers in the UK has now dropped to 31,000, from 41,000 two years ago (Association of Professional Financial Advisers). In order to maintain and attract new business, advisers need to show added value to their clients.

Embracing technology to show added-value
Research from HSBC has revealed that the majority of Britons are predicted to spend 19 years in retirement, with savings that will run out after just seven years. There are a number of ways that technology can help to close both the advice and savings gap that exists in the UK.

Daniel Harrison

Daniel Harrison

The financial services sector is currently experiencing change like never before, so it is essential that the advisers are armed with the most powerful, most user-friendly tools available to them. Using technology, advisers can offer an even greater, more transparent value proposition post-RDR. They can also demonstrate added value to clients by offering a means of saving that fits with their goals as well as their lifestyle.

In today’s society, people want to be able to access their financial information on the go, at a time that is convenient for them. The best platforms allow investors to view their investments and review their performance in an instant using a tablet or laptop computer. Effective platforms keep clients informed every step of the way.

Technology allows investors to save in a simple and engaging way and as a result, has the potential to bring new savers into the market, increasing the accessibility of stocks and shares investments.

This isn’t a case of technology for technology’s sake either, or of technology replacing the valuable advice process – it’s about meeting client demand in an attractive, always-on manner. Those who think their clients don’t want this information will be left behind in the market place.

As well as improving the customer experience, technology can also streamline processes to help advisers demonstrate compliance. This leaves them with more time to advise each individual by reducing the burden of administration. This is particularly important as the FCA has said that they will check that clients are getting exactly what has been agreed and that the firm is monitoring this and acting where needed.

Ian McKenna, from the Finance and Technology Research Centre, said: “In two years’ time, if you don’t have a mobile proposition for your business, you don’t have a proposition at all. It is essential for advisers to embrace connected, mobile, multi-screen solutions.”

If advisers continue to ignore the benefits of technology and rely on cumbersome paper-based methods, this will exacerbate the current adviser gap as more advisers fail to compete for business and cannot demonstrate enough client value to justify their charges.

Global Banking & Finance Review


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