What role can face-to-face advice play in UK’s savings policy?

How advisers, engagement and education can close the advice gap

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While Brexit battled on in the foreground, UK parliamentary business also turned to closing the advice and savings gap.

In written evidence to the Work and Pensions committee, looking at transparency in pensions savings, Quilter said it wanted to see emphasis on engagement and education.

The firm’s evidence highlighted face-to-face advice as a value proposition, the added value to those who do take advice, and the role of technology in empowering choice.

The best way to achieve value for money is through face-to-face financial advice, Quilter argued. It cited its own research showing that advised customers are more knowledgeable and engaged. MPs learnt that retirees who have seen an adviser even just once, had on average £7,000 more per year in retirement.

Whilst the perception of value differs from person to person, Quilter’s research shows that 82% of customers found the financial advice they received at least ‘valuable’ and 62% of customers were ‘extremely satisfied’ with the advice they received.

Technology has and will continue to play a crucial role in delivering education and stimulating engagement when empowering customers, Quilter said in evidence. The industry and the government need to do all they can to utilise technology and make it widely accessible, including encouraging and promoting the creation of the pensions dashboard, it said.

Technology

Quilter’s views in support for face-to-face advice echoed those of UK private bank Brown Shipley, commenting on the disposal of UBS’s digital wealth manager earlier this week.

Guy Healey, head of private banking at Brown Shipley, said they were looking at a hybrid approach, which still had face-to-face client adviser meetings at its heart.

StJohn Gardner, managing director, investment management at Arbuthnot Latham, said the UK regulator’s work on streamlined advice showed there could be no shortcuts.

Advisers’ understanding and skill, he argued, could not be replaced by online questionnaires and algorithms.

“Those that have attempted a robo offering often find their call centres overloaded with prospects asking for more information or with more questions to be answered, rendering the proposition uneconomic,” observed Gardner.

“There is no true substitute to the ‘face-to-face’ model where information can be gathered during a conversation in which the relevance of each question can be explained if need be,” he told International Adviser.

“This assists the clients’ understanding of the factors that lead to suitable advice and the engagement leads them to volunteer more relevant information as the conversation develops.

“The adviser can also gauge body language and gain a sense of the clients’ understanding of what has been described, the implications of the advice and whether the client exhibits any vulnerabilities that need to be taken into account when offering the full written advice for them to consider at their leisure, enabling the prospect to sign up when they are truly comfortable they understand the advice and proposition.”

Andy Thompson, chief executive of Intrinsic, Quilter’s financial planning business, said advisers had a crucial role to play.

“Advisers save their clients from themselves,” he said. “Investing is an emotive business, sometimes consciously, but more often than not subconsciously.

“Behavioural science has shown that we are prone to making ‘rash’ decisions, such as moving money to cash when markets drop. Advisers are there to steady the ship during the storm and will more than likely remind savers that markets go up as well as down.

“The value of advice can be a hard thing to measure in pure economical terms, because it’s not just about the money, it’s about the safety and security of having someone you trust help you manage your retirement savings. Indeed, our research shows the overwhelming majority of consumers get value from the advice they receive.”