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Financial planning in the 2020s: Three ways to start preparing now

Simon Rogerson

This article first appeared in Professional Adviser.

Financial planning is set to change significantly in the decade ahead. The successful firms will be those who don’t merely navigate that change, but who seize the opportunities to do things better.

Key to preparing for the future will be on three areas. Firstly, ensuring technology is at the heart of any business to drive a better customer experience, secondly focusing on the next generation of financial advisers and thirdly being ready for future clients.

Use tech for what it’s good at

Technology will revolutionise many areas of financial planning and be at the heart of change. But it’s not a magic wand. The key is to think carefully about how technology can be used to enhance relationships with clients, rather than replace them.

One thing technology is really good at is minimising friction, to improve customer experience. It’s easier now than ever for clients to access the details they want. Customers can increasingly go online, log in to their account and gain information for themselves, all in a matter of seconds.

But there is definitely much more to come. For example, it seems bizarre that customers still can’t see all their finances – savings, investments, insurance, credit cards, bills, direct debits, loans and mortgages – all in the same place.

As technology continues to improve, it will make it easier to provide and access this kind of broader service. Clients will come to expect it. This will be an opportunity for innovative advisers to offer an even more holistic service.

Firms that have technology at the core of their business will also have the data they need to make smart, evidence-led decisions. Again, the key will be using this advantage to make things better for customers. In the decade ahead, businesses that look for ways to use technology to remove client hassle and offer something of real value, that they’ve not had before, will thrive.

Find new advisers with the right skillset

One thing technology won’t do is replace the most important things a client looks for in an adviser: a fellow human being they get on with.

A major reason clients have an adviser is because they want to talk to someone they know and trust. Advisers often tell us the first part of many client meetings is talking about the family and generally catching up. An algorithm can’t compete with that.

Secondly, technology can’t make people do something they’re not comfortable doing. For this reason, the shift towards do-it-yourself financial services will probably be slower than many people think. While it may happen quickly for products such as mortgages, savings accounts and insurance, investments are different. They are inherently complicated and many people won’t want to self-diagnose.

If you plan to grow your business by hiring new staff, then empathy will be one of the essential qualities you’re looking for. Just as it always has been. The next generation of clients will be ever more diverse and tech-literate. So will their advisers, and this is something to consider for recruitment over the next decade.

Talk to your clients’ children and grandchildren

The best way to learn what the next generation of clients will want is also the simplest. Talk to them.

They are your clients’ children and grandchildren. In most cases, they will be the direct beneficiaries of your clients’ wealth. If these conversations haven’t yet happened, there is a clear reason to do so as part of your clients’ estate planning.

Talking to a client’s family can help deliver a better experience for the customer and their dependents. It retains the relationship, knowledge and experience which has been built up over time, and it will make it more likely for beneficiaries to retain you when they receive any inheritance, which for some, will be the first time they seek out professional financial advice.

But it will do much more than this. Talking to the next generation will provide insights into what your future clients want. This will help to make the right decisions in the coming years, for example when deciding which technology to implement or which new staff to hire.

Start talking to your future clients can give you an invaluable edge.

Making yourself irreplaceable

Great business will always be about how you make your clients feel. In the decade ahead, success will come from using technology to remove client frustration and drive innovation, but it cannot replace the human factor clients will always want.

The most successful firms will be those that combine both elements to create something customers can’t live without.

For journalists in their professional capacity only. The value of an investment, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest. Personal opinions may change and should not be seen as advice or a recommendation. We do not offer investment or tax advice. We recommend investors seek professional advice before deciding to invest. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London, EC1N 2HT. Registered in England and Wales No. 03942880. Issued: September 2018.