I have been working in financial services for 22 years and been advising people on their money for 20 of those years. There have been plenty of changes over that time but the biggest ones weren’t imposed by the Central Bank, they were imposed by the market, what people wanted. I worked for years under the sales target model, where you got a low basic and most of your income came from reaching sales targets by earning commission. The biggest change for me has been changing from charging all clients commission to now most clients paying me a fee. This change was not imposed on me by the Central Bank but from what my clients want.
Looking forward, I have no doubt in my mind that technology will take over the the purchase of financial products like pensions, investments and risk benefits. People able to buy them online with relative ease and the need for a “broker” who will sell you products will go the way of travel agent or phoning for a taxi…a few people will still use them but most will go online.
The automation of financial products doesn’t mean that people still won’t need financial advice, they will. But the advice will be helping people on what they want to spend their money on rather than just accumulating money. And to be honest, that is where all the fun it.
Accumulating money is nice. It provides you with security and gives you choices on what you can do. But it is only good when it has a use. That is where the future of financial advice is, working with people to figure out what is important to them, what they want to achieve in life and when they want to achieve it by. When you look back on life, you want to know you have enjoyed yourself and had experiences.
To do that you need a plan and have to be able to balance the day to day expenses as well as the fun experiences you want to have. The correct structures have to be in place to make it happen and you have to have the correct attitude to money to gain financial independence over the long term.
This is something that computers cannot do (at the moment). Why? Because a computer won’t ask the soft questions that a financial planner will ask you about what you want to do. A computer will accept your answer and will not probe if they sense there is something else that you want to disclose that really matters. A computer will not distinguish between an expenditure that you will be unwilling to give up because it makes you happy and one that you are quite happy to give up and save the money instead.
What do you think? Where do you see financial advice in the future? Are you happy to pay someone for advice and get the products yourself? Let me know by sending me an email at email@example.com
19 October 2020