How do you solve a problem like the Advice Gap?
At Fin-k Tank we took a look at all things new in tech and wealth. With a particular focus on advice and engagement.
With the FCA also formally asking for input to consider the success of the RDR and FAMR [broadly good; not good], an audience vote at the event was resoundingly clear that FAMR had not delivered the required solutions and the Advice Gap was alive and well. We heard that last year just 3% of Brits saw a financial adviser, which leaves 47% of the population with some sort of cash savings and/or investments but no Big-A-Advice
To tackle the problem, we heard about new models including financial coaching being rolled out through the workplace, as well as events for women. Both interesting ideas. The burning question with these models as always is profitability and scale. I have seen that people respond well to events with like-minded people at similar lifestages. I can see that many 25-to-55-year-olds need validation and guidance but not full financial advice. And I’ve gone into companies to speak to employees about money. But how to turn on these taps, scale, manage the risks and turn a decent profit...Discuss
Demos and discussions from fintech trailblazers
One of the more interesting demos at this year’s Fin-k Tank was from Advantra, which showcased software aimed primarily at private banks, tracking facial movements and responses to videos to help assess risk profiling. Part of the FCA’s Sandbox, this firm tracks every facial grimace and pigment change in response to videos of Formula One races and other similar scenarios, to see how we react to risk!
MoneyInfo showcased what their software is delivering to financial advisers. Not radically ground-breaking from a tech perspective but powerful in what it does. For me, the ability to store and file documents like house and car insurance in one place, alongside ISAs and pensions, would be hugely valuable. At a time when the ‘value’ question is being debated and revenues are under scrutiny, ‘pimping’ the user experience beyond the investment story is a no-brainer. I’d pay more for this digital filing cabinet than for a straight-out execution-only ISA
One of the audience’s favourites was Tickr, an impact investment app. Founder Tom’s story touched a nerve – it was only after visiting a housing development in India and then telling his Mum about it that she understood what he did for a living (after years in asset management). I think it is this nuance about impact investing which people overlook – it tells a story which makes investing tangible, relevant and, yes, even interesting. 90% of his customers are under 40 and 40% are women
As a final observation, Dr Anastasia Dedyukhina talked about digital distraction. Using Skinner’s pigeons to make her case (if you occasionally reward a pigeon for pecking a target, the poor creature will peck thousands of times for the chance of another reward) she talked about the dopamine hit we get from alerts, likes and other online engagements. Understanding this on a personal level is one thing, but considering our customers’ behaviour when deciding what messages to hit them with (and when) is another. Some robo advisers feel the need to inundate me with notifications every time they breathe - they could consider this food for thought and cut back on the news!
It’s all still a very human tale
The common denominator at Fin-k Tank, at least for me, was the human thirst for reassurance. For validation. For ease and simplicity. Technology is a support act to connect, not do. To deliver a story, not to be the story. We might all sit on a train and look at a mobile screen to see the numbers, the facts, the balance. But to get to the numbers on that screen in the first place is still a very human tale. And until Apple work out how to clone us, technology alone is no answer to the Advice Gap.