What can Bob Dylan teach financial advisers?

Image by Gerd Altmann

Image by Gerd Altmann

by Richard Braidwood COO, Visible Capital

Bob Dylan was right about a lot of things. Some of my favourite pieces of his piercing poetry which resonate with truth include …

“Behind every beautiful thing there’s been some kind of pain” (Not Dark Yet, Time Out Of Mind, 1997)

  or maybe

“Strange how people who suffer together have stronger connections than people who are most content”. (Brownsville Girl, Knocked Out Loaded, 1986)

But for financial advisers in February 2021 at the tail end of a pandemic, I think there’s only one Dylan lyric we all need to take to heart. And you’ve guessed it I’m sure ….

“For the times they are a-changin’” (The Times They Are a-Changing, 1964)

Times are indeed changing and for financial advisers they are bringing transformative new business opportunities, powered by technology.

A 12 point plan to boost trust in the wealth management profession and rationalise regulation was published this week by the Personal Investment Management and Financial Advice Association (PIMFA) features some useful insights and recommendations for moving the profession forwards, many of which depend on harnessing new fintech.

One of PIMFA’s key observations focused on the lack of success the market has had in expanding its service profitably to meet the needs of smaller clients. This was understandable in the days when customer onboarding could take days of tedious paperwork and when crunching the numbers it made no sense to spend perhaps over 20 adviser hours processing a customer with an income of £17,000 per annum and a pension pot of £25,000, when you could be spending the same amount of time bringing a multi-millionaire customer onboard. However, with technology like our own Visible Capital automated customer onboarding software integrated into an adviser firm’s own back end system, the whole onboarding process can be reduced from days to a matter of minutes.

And that changes everything.

Suddenly that means PIMFA’s objective of “the creation of new, lower cost advice services to provide effective advice to a wider market”, is not only possible, it has the potential to be very profitable. By lowering administration costs so drastically, automated onboarding can open up opportunities for financial advisers to take on one or two of a customer’s financial requirements without the need to sell in the whole cycle of investment support. At a stroke, lower costs reduce the barrier to entry and transform the lower value end of the market into very profitable territory indeed.

The other recommendation in PIMFA’s report which grabbed my attention was its advice that there is a need for “a regulatory framework to support such a simplified advice service” and, in particular, its suggestion that a “must-have” feature of an enhanced regulatory framework is “a different standard of fact find”. 

We couldn’t agree more and are enthusiastic proponents of supporting the development of regulatory frameworks as technology provides the industry with more data. Our automated customer on-boarding technology, for instance, can categorise a customer’s income and expenditure into over 150 categories such as how much money a customer spends on the weekly shop, holidays or even their Costa coffee habit. All at the touch of a button, in minutes. It’s a better experience for the customer, reduces data input but enhances data quality, has huge cost savings for the adviser, and importantly it means the first conversation you have with your customer is about giving advice, not gathering data.

PIMFA is right on the money. The fact find as many financial advisers know it can be transformed out of all recognition, overnight. The technology is there and my guess is that it won’t be long before the regulators are embracing the opportunities to create higher standards of fact finding and ongoing suitability reporting across the board.

For the times they are a-changin.

Richie Braidwood