Seeing a financial advisor can be like seeing a doctor – you could go in for a simple check-up and learn you’re in for serious health problems down the road if you don’t make changes now. But you’ll only learn that if you see the doctor or see the advisor. And there’s no NHS for financial advice, which means around 18 million people are currently unable to afford to ask for help.
In the past: you could go to a financial advisor and get a recommendation for free, but they’d often send you to whoever paid them the best commission
In the present: you pay for a financial advisor’s time and get an independent recommendation that’s in your best interest – commission has been abolished, but advice isn’t cheap
In the future: technology will bridge the gap between independence and affordability, and there are a number of ways this could happen…
We kicked off this month with our annual Fin-k Tank seminar, which saw tech geeks and money mavens come together to discuss the future of finance for everyday folk. One of the focal points this year was the advice question, and there were plenty of clever solutions offered up.
1. A money coach in every village
Adam Price, CEO of Hatch, thinks there simply aren’t enough advisors to cater for everyone, and the rules of supply and demand mean this pushes up the price. To overcome this, Adam thinks we need to remove the barriers to becoming an advisor.
Currently it can take years to qualify as someone who can recommend specific products, but Adam says it only takes 4 weeks of training to be able to use Hatch’s planning technology. This entry-level advisor would be no good for complex needs, but potentially great as a cheap way of giving people personalised food for thought.
2. Lightbulb moments and shared learnings
Davinia Tomlinson, Founder and CEO of Rainchq, focuses on helping women who are “crying out for advice and information about their personal finances”. Although women tend to be diligent savers, she argued, they often don’t know if their money is in the right place.
What we need is a shift in mindset, to explain why advice is worth paying for. We also need a shift in access and inclusion, to invite more people in and make them feel this is for them. But how? Davinia suggests an app that pulls together group coaching sessions, help from an advisor you can relate to, and convenient educational material.
3. Creating healthy habits
Joe Parkin, Head of iShares and Digital Wealth at BlackRock, says the traditional advice journeys just aren’t working any more. Now that we have so much tech at our fingertips, it seems silly to expect people to travel to someone’s stuffy office and potentially feel patronised. Instead, we need to rewire our everyday micro-behaviours.
Fitbits have made people more conscious of their physical health on a daily basis, as have initiatives like eating your 5 a day, so what could the financial equivalent be? There are apps that round up the 2p left over from your £2.98 coffee and invest them for you, but it’s time to translate this to learning about pensions and all the other jobs that are long and boring but hugely important. It’s technology’s job to make it seamless.
Do any of these solutions stand out for you? Think one would work better than the other for someone in your circumstances? With the FCA (Financial Conduct Authority) currently reviewing the way financial advice is given and paid for, now’s the time to let us know. As ever, we’re keen to help the masses find their way to financial security, so we’ll be doing our part to get your voice heard.
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