The technological revolution in an ageing adviser population

Traditionally financial advisers and, to a lesser extent, mortgage advisers have tended to be of a certain age. The industry itself has grappled with many issues in recent times but bringing new blood into the advice sector has always seemed to be a overriding problem and, even though adviser numbers have risen in recent years, one might still argue that we are not as good at marketing the sector to potential new recruits as we should be.

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Julie Murray | Stonebridge Group
18th May 2018
julie murray revolution
"You, as an adviser, might well think you are not going to be touched by such changes over a relatively short time scale but you might well need to think again"

What this leaves us with is not so much an ageing adviser population but certainly one which is ‘of an age’ and this could mean that we as a community are not so concerned with the long-term future of the advice profession. For instance, if you plan to retire in a decade or so, then why would you be concerned with the longer-term future for mortgage advice?

This mindset however does need to change for a number of reasons. First up, is the fact that technology is reshaping the delivery of mortgage advice and the methods used. You, as an adviser, might well think you are not going to be touched by such changes over a relatively short time scale but you might well need to think again, such is the revolution that is taking place not necessarily in mortgages but certainly in financial services, which will ultimately touch on our sector.

It’s become such a major issue that the FCA itself set out a series of predictions recently which, while not suggesting a doomsday scenario for advisers, should raise concerns if you believe technological change won’t impact on your business and livelihood.

For instance, the FCA said increasing technology use would mean a fall in the number of mortgage advisers, as new firms using AI/robo-advice systems entered the market more frequently, and took greater market share. Indeed, it says that ‘mortgage intermediation and credit broking’ are two areas where the competitive battle is likely to be fiercer than ever before, and this could ‘lead to mortgage firms reducing their reliance on traditional mortgage brokers’.

For ‘mortgage firms’ one presumes the regulator is talking about lenders with the argument being that slick technology and systems introduced by lenders will make it far easier for customers to use online services, and thus they might not necessarily need a ‘human adviser’ to deal with their needs, or to deliver their recommendation.

Now this of course is a well-worn argument around how consumers might – in far greater numbers – get their advice through a robo adviser or the like, or indeed might be far more willing to product transfer via a lender’s system which appears to take the ‘hassle’ out of the mortgage process for that existing borrower. I’ll admit I’m not overly convinced on whether this will play out as many believe – we’ve already seen a number of surveys recently suggesting that customers are actually less willing to hand their financial data over to companies because of the perceived fraud threat and risk. So those firms relying on a big take-up from Big Data and Open Banking might not be as popular as they might have hoped to be.

However, to ignore the potential threat of what is happening would clearly be a mistake – especially if you misguidedly believe its impact will be so far in the future that it isn’t likely to impinge on you one iota. There will certainly be clients who are willing to move to a technology/mortgage advice line of least resistence, whether that be through using the robo advice system of a competitor adviser or choosing simply to transact with an existing lender, and advisers have to be prepared to confront that threat now, not just see it as one for the next generation.

In that sense there is absolutely no harm in adding such services to your advice portfolio or indeed looking to work with firms who have this already and are prepared white label it. Many clients will not want to go through the whole process online via the tech, but some will, plus for those that don’t it might well give them an indication of what products they can secure, what level of loan they can get, and the necessary criteria, before jumping off and using your skills and experience face-to-face, over the phone, or via e-mail.

The threats do exist, and they will grow as time passes but as an experienced adviser with a bank of clients and a focus on what tech you can add to your business now, you will be able to secure your future. The time to act is here; not to do so might mean you get left much further behind.

 

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