Early last year it was announced that the three government financial guidance bodies will be merged into one single body. The new guidance body will focus on protecting people from scams and fraud as well as offering guidance
Pension Wise, the Pensions Advisory Service and the Money Advice Service will be merged no earlier than autumn 2018 and the new body will be funded by a continuation of the levy on the financial services sector. It will still be the subject of Cabinet Office approval.
The government's decision to bring together all public financial guidance within a single body could give individuals more clarity on where they need to go to get support. However, especially for those with complex needs, it is no replacement for regulated advice.
IMPORTANCE OF ONLINE COMMUNICATION
It is important that the new body complements, rather than competes with, financial advisers. The vast majority of people of all ages need more support, especially those who are approaching retirement. Many of those people are looking to the internet for help and are likely falling short.
The Treasury consultation highlighted that many people rely on digital services for information and guidance on key financial decisions and the new body will have a 'well optimised' website as well as telephone, webchat and face-to-face guidance.
We strongly believe that digital communications can help streamline the financial advice process and allow people to choose how they consume information, and are pleased to hear that the new guidance body will recognise this.
Technology by no means replaces the need for other forms of communication and there is still a need for human interaction. However, many people are now used to communicating with companies online and expect to be able to do the same with their financial services providers.
Against that, not everyone is comfortable communicating in the same way, so the financial advice industry cannot put all its eggs in one basket.
The introduction of the Retail Distribution Review, adviser charging and the removal of commission payments in January 2013 led to the start of unprecedented change in the UK financial advice market.
Advice firms went through an exercise of reviewing their business models and developing new propositions. At the same time there was growing research evidence of changing consumer behaviour towards financial services.
Consumers are increasingly looking to financial planners and wealth managers to offer a wider choice and more digital services.
SIGNIFICANT MARKET FOR LOWER-COST ADVICE
It is now widely accepted that if advice firms can provide lower-cost propositions there is likely to be a significant market for them. Technology providers have also spotted this opportunity and believe they can deliver the solutions needed to make this happen.
There is no question that there is a role for automated advice. To make advice more inclusive the industry needs to develop alternative distribution channels that potentially appeal to a new generation of customers.
In its current guise automated advice is perfectly positioned for those people who have simple investment needs, or who are not looking for a holistic financial review. It can offer a personal recommendation, which differentiates it from self-select or execution-only strategies.
For financial advisers, we believe there are many reasons to consider introducing robo-style services. They give consumers a choice as to how they access services, and can appeal to a broader range of clients and be successfully integrated into a traditional service.
But we are concerned that the term robo-advice implies there is no role for human interaction when shaping propositions powered by this kind of technology.
Several advisory firms are using our Interact tool (launched in 2014) to reshape their business and operating models, in order to ensure that investors can choose how they interact with them.
Some are using the tool as a full self-service online advice offering, while others are choosing to use it to support conventional advice processes by providing investors with an online risk-profiling tool which can be used either face-to-face or remotely.
We are keen to show it is possible to blend smart technology with different degrees of human interaction to create bionic rather than robotic advice.
This gives the investor control over the level of personal engagement and automated processing that they feel is best placed to meet their needs.
Richard Goodall is marketing and distribution director at Parmenion.