Developing a sustainable financial planning offering

Maarten Boddeus, Figlo Specialist, Yellowtail Business Solutions.

Gone are the days when it was alright to sell the consumer an off-the-shelf financial product. These days consumers are increasingly looking for more transparency. They want to understand why the product is relevant to them, and how it will help them achieve their long-term goals.

With the upcoming Retail Distribution Review set to drive fee-based advice, the challenge for financial advisors now, is how to show your added value. Until now it was generally accepted that financial advice came without a fee, yet the hidden costs were found within tied-financial products or in the form of commissions. While this did not necessarily affect the consumer at face value, the hidden cost to the consumer was that tied-advice meant that the consumer didn’t necessarily receive the most suitable product to their long-term financial goals.

There is a global shift towards customer-centric advice where the customer’s needs are in the centre, and products are the supportive pieces in the financial planning puzzle. The challenge though is how to shift traditional financial planning models in such a way that they meet the needs of the consumer, and how to evolve advice into a product that the customer is willing to pay for.

Experience shows that today’s consumers are looking to be more involved in setting their financial goals and putting the process in place to achieve those goals. Increasingly time poor, they are not necessarily available to spend hours with a financial planner. Instead they are more willing to start the financial planning process at home, online before engaging with a financial advisor. What is essential is that when the customer engages with your brand online, they expect to find a seamless omni-channel, rewarding experience. The rise of robo-advice in the UK and US markets highlights this trend towards shifting to an online model, however advice as a product is channel-independent and should include face-to-face time with a customer.

While some financial institutions may hold onto traditional financial planning practices, the reality is there is no longer a one-size fits all solution. There are many benefits to adopting this new model of advice as a product, including creating trust with the customer through increased transparency. Also by offering a more personalised service, the customer is likely to have a plan that meets their needs and better prepares them for retirement. Cross-sell opportunities are likely to present themselves as the financial planner has more of a bird’s eye view of the customers life plans.

Advice as a product is the the natural next step in the evolution of financial planning. Through utilising world-class financial planning solutions there is natural upside for the customer and the financial planner, the customer receives more personalised advice, and the financial advisor develops a more sustainable financial planning offering.