Innovation and Self-Service 

An interesting conversation with a conference organiser about how to improve on next year’s event brought me back to one of my recurring themes: how frequently we underestimate the importance and relevance of innovation.  As a sector financial advisers seem exceptionally vulnerable to the “we’ve never done it that way” school of strategic planning. 

There was of course no way that the horse could ever be replaced, and I have been reminded in the light of the protests against HS2 that the original ‘HS1’ railway was thought to be completely pointless as there was nothing wrong with the canal network. 

No-one would ever want a Sony Walkman and spend all day wandering around with music in your ears all the time. Who wants a book that’s not a block of paper?  Or to take pictures without film?  And far from having no more than five computers in the world, I would suggest that most modern households have five computers. 

Research undertaken by The Platforum indicated how many advised clients were also interacting direct with platforms, often without their adviser’s knowledge. 
Yes, of course none of your clients would do that? 

But stop for a minute. Why wouldn’t they?  And how would you know?  Do they really tell you everything? Are you confident that you know about all their assets and investments?  And if they think that it’s cheaper to deal direct than take up your valuable and frankly expensive time then they may feel increasingly inclined to cut out the middle man, or woman.

And what about the smaller clients, the ones who won’t pay your fees?  Firstly, did you ever ask them?  Did you give them the choice?  And secondly, who are they going to get advice from when their assets have increased to an appropriate level?

We keep repeating the mantra that our clients are loyal.  But if our clients are loyal, so are everyone else’s.  Which means that all those people who are getting advice from firms who have found a way to deal with smaller clients profitably are not simply going to change advisers once they hit this magic threshold that most advisers and planners have set. 

This also means that they are unlikely to behave differently if they inherit money, or win the proverbial lottery.  When they have the chance to take cash from their pension, either the tax free bit or the whole pot they are likely to either self-serve, or take advice from online offerings, rather than just switch back into the high net worth adviser market. 

And to fall into the trap of saying that that clients would never make those sort of financial decisions without seeing an adviser face to face and getting personalised planning and reporting is to fall into the same trap that Kodak, IBM, stable boys and watermen have fallen into in their day.  

Gill Cardy, 12/12/2014