Advisers are currently coming to terms with the raft of changes implemented in the Budget and some are still adapting to the post RDR world.
This is a crossroads for the industry, where it needs to look forward at how it can adapt to remain relevant. Technology plays an increasingly important role in achieving this change.
When George Osborne signed off his 2014 Budget statement he gave pension savers a new level of freedom which could quite conceivably prompt an increase in income drawdown activity.
Because of this pension holders will now have a real opportunity to move away from annuities and take advantage of the flexibility that drawdown offers, something which in the past has been predominantly utilised by those in the higher income bracket.
This gives advisers a clear opportunity to demonstrate the value of professional, paid-for financial advice to clients amongst these new regulations and rules. Pension savings can now be taken as a £30,000 lump sum, which brings a whole new dimension to the pensions world. Advisers need to be at the top of their game and ensure they have the right tools at hand to analyse their clients’ holdings.
This will ensure they are providing the best advice on an on-going basis which will prompt clients to put real value on professional paid for advice. Technology has adapted to be RDR-friendly, and there are online tools that produce reports detailing all the products and funds that have been researched and considered, thereby providing a valuable audit trail for compliance purposes.
Many of these tools act as a supplier, tutor, recorder and verifier of CPD activities, providing records that can be independently corroborated.
The shift to fee for consultancy rather than commission for a transaction has profoundly altered the business model for many financial advisers. The process of making this shift means fundamental changes to client segmentation, charging structures, business development and revenue streams. This is new territory for many.
Most advisers will have to segment their client base and focus more time on higher value customers, but they also may need to provide support for lower value customers quickly and profitably.
No industry can afford to ignore the digital revolution. The growth of social media means that today’s consumers increasingly look to online sources first when selecting a financial product.
Advisers need to be prepared for better informed or, at the other end of the scale, misinformed clients. It also highlights the need to have a strong online presence and good reputation so as to attract new business.
Technology enables advisers to work smarter in the ‘at retirement’ and ‘in retirement’ phases by comparing growth and income options, which could for example combine income drawdown with annuities which has never before had such weight .
Technology is important for everyone. With the huge changes that are affecting financial advisers at this time it is vital for the industry to embrace technology at every level in order to adapt, survive and thrive in the brave new world.
