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Advisers believe a hybrid model for financial planning is the future

16 Apr 2019

Most financial advisers now believe a hybrid of traditional face to face service combined with elements of robo-advice will be the future of the financial advice industry. Key to this will be making the most of technology but not losing the human touch. This is according to the latest research from Octopus Investments, part of the Octopus Group, which conducted a study exploring advisers’ views on the outlook for the UK’s financial advice market.

 Three quarters (76%) of advisers polled said a hybrid financial advice model will be the future. An even greater proportion (81%) also indicated they believe that the next generation of financial advisers will have to incorporate aspects of robo-advice into their offering.

More pros than cons

This sentiment reflects advisers’ increasing awareness that robo-advice could become the way some people initially get financial advice, presenting an opportunity for advisers to show the benefits of advice and expand their client base in time. Three quarters (74%) said they believe that accessing financial advice online will become a key channel for younger clients to seek financial advice in the future.

Advisers also cited other benefits with 44% expecting technology to help free up their time to better service clients, while a further 36% said it will encourage competition. 

Only a small proportion of advisers took a negative stance. Just one in ten (13%) said robo-advice distracts from the core face to face advice proposition, 11% said it doesn’t offer a tailored service and 7% said the risk profiling it offers is too imprecise to be useful.

Ruth Handcock, CEO of Octopus Investments, comments:

“As many advisers clearly recognise, technology will play an increasingly important role in the future of financial advice, and there are some obvious benefits for the industry. Yet for most people, a smart online interface with some risk profiling is not going to replace the value of a financial adviser.

 “Our financial lives are deeply interwoven with our personal, professional, and family lives, which are rarely straightforward. When making big life changing decisions, we need someone who is able to listen, build trust, and empathise with our goals. Advisers know this better than anyone. The real opportunity lies in combining that human touch with smart technology.”

 Has the change already begun?

While the majority of advisers think integrating an element of digital advice will be integral in the future, many have already begun making changes. Over a quarter (27%) of advisers surveyed said they had incorporated some form of online advice into their business, with a further 57% actively considering it. Just 16% said they had no plans to introduce any form of robo-advice.

Andy Sewell from LB Financial said: 

“These are interesting findings from Octopus which provide insight into what the future of the industry might look like. Our business is likely evolve with the next generation of advisers and adviser clients. But we believe that both face to face advice and online functionality will be important. What we need is for technology to help drive efficiencies so that we can spend more time working directly with our clients to help them achieve their goals. We also want to create more options so that clients can access advice in the way that suits them best.”

Jacqueline Lockie CFP™ Chartered FCSI, Head of Financial Planning, CISI said:

“It’s clear that investor habits are changing, as the next generation of adviser clients comes through. Millennials have different communication preferences with a tendency to rely more on technology and information online. However, research has found that young people are still big fans of human interaction and relationship-building, which is key to developing trust. This is why a hybrid model, where face to face advice – underpinned by smart technology, will be key in the future.”

 Could the fee structure change too?

With traditional advice fee structures under increasing scrutiny, advisers were also asked whether they thought a subscription model, in which customers pay a fixed monthly fee to access advice, would be adopted in the UK.

Three quarters (77%) of advisers said they believed the UK financial advice market would eventually be run on this model, although the majority (60%) of these advisers said it would take five years or more to happen. Only 11% of advisers said the UK would never be run on a subscription model.

The model has proven successful in the US with many providers such as Grove Financial Planning or recently the Schwab Intelligent Advisory platform offering a tiered structure that gives customers varying degrees of access depending on their preference and payment option. 


Notes to editors:

*Research was conducted via an online survey among 275 UK financial advisers by Opinion Matters between 12 December and 31 December 2018.   

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: April 2019.