Our theme for our latest #langcatlive event was all about regeneration. The agenda focused on the kinds of things advice professionals need to consider when it comes to the future of their business, and the areas of planning where we need to rethink and ‘go again’.
But there is little point in the advice sector setting itself up for the future if this isn’t matched by new ways of doing things across the board, both at a regulatory level and a provider one.
We explored this as part of our recent post-event roundtable, particularly the FCA’s direction of travel on advice and guidance, and where the industry as a whole should ‘regenerate’ and refocus its efforts.
We were joined by:
- Al Ward, head of adviser platform, Aviva
- Chris Law, head of UK platform sales, Morningstar Wealth
- Jenny Davidson, commercial proposition director, Quilter
- Seema Thakkar, strategic partnerships director, Scottish Widows
- Tom Lovett, managing director, FNZ Q-Hub
An even bigger advice gap
Our keynote address came from FCA head of consumer investments Kate Blatchford-Hick, who outlined the regulator’s early stage thinking around how to get advice and guidance to more people.
One of the FCA’s proposals is ‘targeted support’. Instead of the current approach of a personal recommendation ‘based on you’, targeted support would be framed as ‘based on people like you’, which would allow firms to base support on more limited information about the consumer.
Panellists at our roundtable generally welcomed what the regulator is trying to do with its advice and guidance proposals, but also raised some concerns about what has been put forward.
Aviva’s Al Ward said it was good to see the FCA discuss the rules and options that exist today for firms wanting to offer guidance services. For its part, he said Aviva is working through the detail of the regulator’s proposals, including how these could benefit its workplace customers.
But he argued that advice and guidance needs to be looked at in the context of Consumer Duty, which he warned may have unintended consequences for the affordability and availability of advice.
“We have seen the advice gap grow post-Consumer Duty, as firms look at value assessments and say: ‘I can’t afford to service those customers’, or as firms put their minimum fees up, which has a similar effect.
“We definitely support the principle of what [the FCA] is trying to achieve, and it should drive better outcomes. But it can have implications.”
‘People like you…’
Questions were also raised about how targeted support would work in practice, such as what the concept of ‘people like you do this’ might mean for the consumer or client experience.
Jenny Davidson from Quilter said: “Thinking about good customer outcomes and the ‘people like you’ idea, we might actually all have a different view on what that means for an individual or a particular persona.
“One of the concerns I have is that an individual retail customer might get contacted from multiple firms with a variety of different nudges or educational guidance, because we all have a different sort of benchmark of what ‘people like you’ means for them.
“One firm might take somebody at age 40 and suggest they require X, Y and Z. And another firm will have a completely different set of outcomes. So I think there needs to be some sort of standardisation. I think we’d welcome that, or some extra information around that.”
Engaging younger people
Scottish Widows’ Seema Thakkar said targeted support chimes with what the wider Lloyds Banking Group business is trying to do and the kind of target customers the bank is looking to approach.
She welcomed the regulator revisiting the idea of simplified advice as part of its advice/guidance consultation, and said this was a move in the right direction, albeit an area where the sector and regulator could move quicker.
Lloyds has recently launched its Ready-Made Investments proposition, and Seema said the response has informed its approach to the kind of clients it is looking to attract.
“We’re trying to make investments more accessible to all, and get everyone on that ladder. What we’ve found since launch is we’re getting quite a lot of interest from younger audiences who are engaging with the product, which is interesting and something we didn’t expect to see.”
Tom Lovett from FNZ argued that having financial guidance and support services that were clear and distinct from advice could help to bring in younger clients and customers. He also suggested that using the job title of ‘coach’ rather than ‘adviser’ might also help attract a different type of client.
“I think just having another word that’s not advice is helpful for younger generations. When we talk about the advice gap, we only really talk about it in financial terms. But there is almost a cultural aspect to this as well.
“It may be a stereotype but there is a whole generation of younger people who don’t like being told what to do – they prefer to be empowered. That’s a different attitude to older generations who are happy to go to a professional for financial advice in the same way they would go to a lawyer for legal advice.”
Tom added: “Having something that just allows us to talk about a different type of service, that’s going to be really useful for engaging younger generations and giving them a stepping stone. Then they start seeing the value of engaging a professional and paying for that service. And then they can step it up a level and go for full fat advice.”
Regenerate
Asked about where providers should regenerate and refocus their efforts, and the challenges that need to be overcome for the sector to be futureproof, several panellists brought up the issue of transfers.
Morningstar’s Chris Law said the challenge of transferring between providers has been talked about for years, and while platform-to-platform transfers had improved, the process is still painful, particularly where third-party Sipps and companies that aren’t on electronic transfer systems are concerned.
“It’s just a nightmare, and yet there’s so many benefits for speeding that process up. There’s not many things that benefit every stakeholder, but speeding that process up would benefit the adviser, the customer and the platform. So for me, that’s a big one.”
Sometimes we at the lang cat hear from advice professionals who want providers to focus on the basics, and deliver good service. Chris agreed this was important but added that tackling deep-seated issues such as transfers, as well as engaging with developments such as AI, would result in driving the sector forward.
He said: “Some of these things will actually improve service, and free up time for customer service reps and other people internally to provide better customer service. I think all of these issues are interlinked.”
Jenny Davidson said the over-arching theme of regeneration resonated for her, both in terms of her own career and the journey the industry has been on, from RDR to Consumer Duty and beyond.
She was also glad to see joined-up thinking from both the sessions with the pensions minister Paul Maynard and the FCA.
“It was great that we had commitment from the pensions minister about the pensions dashboard because that had been something everybody as an industry was concerned about. He said he was committed to [the delivery milestone of] October 2026.
“We also heard from the FCA about the advice guidance boundary, and the minister too talked a bit about nudges. They’re all using the same language at the moment – nudges, guidance and taking the holistic view of a customer. I thought that was all really encouraging.”
Read more from #langcatlive Regenerate:
