Dynamic Planner CEO Ben Goss shone in a high-quality debate chaired by BBC journalist and news presenter Fiona Bruce at the Bankhall Annual Conference 2017.
Ben was one of four speakers on the Technology Panel Debate alongside Paul Armson, CEO of Inspiring Advisers, Intelliflo Executive Chairman Nick Eatock and Peter Billington, Head of IT at Bankhall. The title of the conference – held at Heythrop Park, Chipping Norton in Oxfordshire - was ‘The Past, Present and Future of Financial Services’.
Fiona impressed delegates with her industry knowledge and questioned Ben and asked each panellist to articulate their thoughts on key sector issues and challenges - including how technology in 2017 can help improve firms’ investment process; the potential risks with introducing technology to financial services; and their number one piece of advice for running a successful financial service firm today.
If you were unable to make the event on 23 November, below is a transcript of Fiona’s questions and of Ben’s answers.
Q Is it still possible for advisers to deliver a service which is solely face to face or have we now reached the end of that road? How has this traditional approach been affected by the challenges of ongoing client servicing?
A Running a manual, face to face business today in a digital world is increasingly unprofitable and risky. The regulator since 2011 has published guidance on how to deliver elements of financial planning using FinTech and I have heard them say they do not believe it is possible to run a sustainable business without it. If you look at FAMR and the guidance on suitability, it is all designed to be delivered with tech.
MiFID II requires suitability reviews to be completed annually from 3 January 2018. Unless you are running an extremely high net worth business, it will be virtually impossible to service your clients without using technology in your investment process.
The final challenge is reaching the next generation and lower balance clients. Again, it is not possible to profitably achieve this sustainably. More digital interaction, whether that is through digital servicing or automated advice for simpler needs such as ISAs, is now happening - and through firms such as Dynamic Planner and IO is now possible through your current technology partners.
Q We all agree that using technology can add to business efficiencies and improved customer outcomes. What tips can you provide in using technology, from the first client meeting through the full client advice lifetime?
A I have seen many of our clients adopt the use of technology as part of their process. Far from getting in the way of the process, like the old point of sale machines, the use of an iPad app for example, to explore risk and return is seen by many, many clients as professional and actually expected. It makes your firm look good.
The key though is that your investment process has to be joined up. That means no re-keying data from advisers’ meetings with clients. Systems need to talk to each other.
It also means that your asset and risk model needs to be joined up. The way that you describe risk to your client needs to be the same as the way in which the investment risk is assessed and that needs to be consistent with the way in which the investment risk is reviewed as part of the servicing plan. Risk comparisons need to be on an apples for apples basis. You cannot have lots of different systems each with a different definition of risk. That introduces the possibility of very serious systemic risks for your business.
Q Because it cannot all be good news, what risks does technology bring to the advice industry, distributors and the customer?
A I will come back to the risk I mentioned earlier. The risk of introducing a systemic error into your business is clearly heightened when you use tech in your investment process. If the way that you assess risk with the client is different to the way in which you assess the risk of the investment, then you run the risk of mistaking apples for oranges, so to speak.
I think the key to managing this risk is to do your due diligence on the processes being used to assess risk and to make sure that they join up. Look at the history of the asset and risk model you are using: how did it perform during the 2008 crash for example? Ultimately, your firm is responsible for the advice, so this due diligence is key. Any good provider will be able to answer these questions for you and furnish you with the right information.
Q To run a robust, compliant, profitable and as far as possible future-proof advisory firm, what one tip would you give business owners in the audience today?
A Firms often do not know where to start when it comes to FinTech in the advice process – it can be a bit of a Rubik’s Cube. My tip would be to sit down with a sheet of paper and pen and simply sketch out your current investment process - from risk profiling the client, deciding asset allocation, building and managing portfolios, and then stand back and make sure you are confident that there is a consistency of risk assessment through the process and that ideally data is not being rekeyed. If you are happy, you are in good shape for the future; if not, sketch out what ideal looks like. If you are not sure, talk to your Bankhall RMs. They should be able to help you through the work that we do with them.