Covid-19 has propelled financial planning forward from where it would otherwise have been.

At our third 2021 regional roundtable organised by PIMCO and Citywire, advisers from the South East of England outlined how they have adapted their businesses – and how to make them fit for the future.

‘I’m sure that some of us have been through several financial crises in our time, but I don’t think we’ve ever come across anything like this,’ said Tim Brendon, adviser relationship manager at Ascot Lloyd.

‘It’s led to some huge challenges for financial services companies and one of the things it has done is narrate the pace of change. I would argue that we’re probably five years further on than we would have been in terms of developments in technology, how we interact with our clients and how we market to them.

‘Technology isn’t going to replace advisers, but it will replace advisers who don’t fully engage with it and use it to its full potential.’

Amid the pandemic, Ascot Lloyd has made huge investments in technology – transitioning to digital signatures for client documents and investing heavily in its website and client portal. ‘All these great things that were important to businesses have now become essential,’ said Brendon.

Magus Private Wealth started its digital journey several years ago, developing its client portal and adopting DocuSign. The firm has been amazed at how even older clients have taken to technology, albeit sometimes with a degree of education.

‘We were slightly ahead of the curve, which was brilliant because we didn’t notice a vast amount of difference,’ said chair Michael Aitken.

A more significant change has been in virtual onboarding – taking on clients with investments in the millions having never met them in person.

For Dale Scorer, senior financial planner at EQ Investors, a big benefit of the pandemic is that clients have become more engaged in their financial planning journey.

‘It’s part of their every day now and part of their thinking,’ she said. ‘That’s because they feel that it’s accessible, it’s not just this once a year or once every six months meeting.

‘No longer are we planning a specific hour of a day and a specific week to travel to London or travel to offices or clients’ homes. Instead, we’re able to jump onto a Zoom call and follow-ups are a lot easier.’

From video calls to e-signatures and client portals, the accelerated use of technology has made the financial planning process quicker and easier for clients.

Clients of Beaufort Financial adviser Paul Blakeney can book a meeting online. ‘They’ve got access to my calendar so they can book in a meeting with me without even speaking to my PA. Everything’s so much smoother for the client,’ he said.

‘It brings us into the 21st Century. No more paper – that’s a massive thing. The money we used to spend on paper, photocopying, post, all of this has been stopped. The feedback we get from clients is, why didn’t we do this sooner?’

YOUNGER DEMOGRAPHIC

Another big advantage has been advisers’ new-found ability to deliver a cost-effective online service to younger clients, where demand has rocketed.

‘One of the great advantages of the accelerated use of technology is that we are actually giving back access to many clients who, post-RDR were in a bit of an advice gap,’ said Brendon.

‘Those people who can’t necessarily afford a full fee-based financial planning experience have now realised just how vulnerable they are. Young people are twice as likely to have lost their job during the pandemic than older people.

‘As a consequence, we’ve seen a huge surge of increase from millennials and generation Z clients. It’s jolted a lot of them into thinking they need a plan.’

Many advisers around the virtual table have been scrutinising their propositions and developing different service levels. It is something that has led to a bit of head scratching for Magnus Private Wealth as it seeks to service the ‘Henry’ clients – high earners, not rich yet.

EQ and Beaufort have already segmented their offerings into three different service levels: a lower-cost online offering for those starting out; a middle-of-the-range financial planning service with cashflow modelling; and a bespoke service for clients with complex tax needs.

Over the last year or so, Beaufort has noticed a marked increase in transactional work for Henries, who Blakeney classifies as earning £200,000 or more, seeking one-off pensions advice.

‘They don’t want us to be their financial planner,’ he said. ‘They want us to sort out their pensions and their annual allowances and give them some numbers to go away with. I’ve seen that increase a lot and it will continue.’

While many clients, especially the younger demographic, are looking to do things online, Scorer underlines the importance of ensuring they still have appropriate guidance.

‘We have risk profiled them. We’ve done a couple of sense checks for them. Things like, have you got an emergency fund? Do you have debt?

Rather than them just going online and doing it all on their own,’ she said.

EQ also has a firm eye trained on ensuring clients have ample investment choice to suit their needs, she added. ‘If cost is really important to them and they want to choose a low-cost option, it’s there, but if sustainability is really important to them, we’re able to have that conversation and there’s an availability there, too.’

BROADER SOLUTION

The consensus around the virtual table was that businesses that continue to invest in new technology and efficiency gains are best equipped to survive and thrive in the evolving world of financial planning.

From talking to advisers, Kieran Rai, business development and account manager at PIMCO, perceives a ‘massive drive to increase efficiency and improve internal processes’. Technologies most sought-after include integrated back-office systems and robust cashflow modelling and risk profiling tools.

Against this backdrop, PIMCO is looking to strengthen relationships with advisers by being more than just an investment manager and providing a broader range of free-to-use tools.

These include a tool that screens the fixed income universe and helps advisers to understand variances in performance, one for cashflow modelling and another for risk profiling.

The investment manager is also looking to use its expertise to give advisers greater investment insight on pertinent topics, such as what a 60/40 portfolio might look like in a low-yield environment and how to optimise income.

‘We aim to be a broader solution to a lot of the investment pain points that IFAs face and will face over the next 10 years,’ said Rai.

‘Better technology will lead to better investment decisions in the industry. And if we can reduce the amount of time every financial adviser spends on fulfilling their regulatory and compliance obligations, ultimately that means they have a lot more time to build more relationships and make that advice a little bit more accessible to everyone out there.’

WORK/LIFE BALANCE

As concepts like cashflow modelling become increasingly valuable tools for clients, Ascot Lloyd is promoting goals-based financial planning.

‘What do clients really want to get out of life, both in the real world and in the financial world? Saying you might get a 10% return or a 5% return is completely meaningless to most people and so it should be,’ said Brendon.

Helping people to achieve personal goals and live the life they desire has also extended to its workforce through the implementation of more flexible working practices. As restrictions lift, employees have been given the option to work from home or be office-based.

‘There are many members of staff who, for very understandable reasons, do like working from an office. They don’t have facilities at home to work as well as they would like to,’ said Brendon.

While others prefer working from home, maintaining a good work/life balance is paramount.

‘There is a temptation when working at home to get sucked into working, answering emails at all hours of the day and night. I’m not trying to dictate how they run their lives because they are juggling many things, but we need to make sure people understand this is just a job. There are far more important things in life and they need to take good care of themselves.’

Magus Private Wealth has consulted its workforce to find out who wants to work from home permanently and plans to downsize its office space – both of its leases expire shortly.

‘[Pre-Covid] we would never have been brave enough to have that conversation,’ said Aitken. ‘Now, one of our colleagues is moving down to Cornwall and committing to come up to London once a month for a team meeting. That allows her to do what we talk to our clients about – living the life they love.’

He recognises, however, the pandemic means firms must work harder to retain their ethos and culture.

‘When you’re all office-based, pre-pandemic, it’s very easy to maintain a culture because everybody has those private moments by the coffee machine or the water cooler and you can have team meetings face-to-face.

‘You have to work that much harder to maintain a culture that everybody originally bought into. You cannot overcommunicate when you’re all distant like this.’

HUMAN CAPITAL

In recent years, PIMCO has invested heavily in its human capital, taking its UK global wealth management team from three to 12.

‘We quadrupled that headcount so that we’re adequately sized to service the whole of the UK and Ireland,’ said Rai. ‘Every client has two or three people at PIMCO they can speak to at any one time.

‘It’s very much a human capital story that was a fundamental chink in our armour a couple of years ago and is looking great now.’

Advice firms are investing in their people too, with a keen focus on training the next generation of advisers and injecting greater diversity in the profession.

Magus started its adviser academy four or five years ago. It currently has three trainees and is recruiting another two. The average applicant is aged less than 30, if not 25, with both men and women applying.

Aitken pointed to Australia where you cannot be a financial adviser without a degree in one of the core financial services subjects. ‘We need to be mindful that the level of professionalism that is being imposed upon us is rising year-on-year. You always need to adapt and see what’s coming down the track.’

Ascot Lloyd has recently started a graduate training scheme, which it runs alongside management training initiatives. Brendon has five ‘fantastic’ female advisers encompassing a range of ages in his team of 26 and would like to see greater diversity among advisers overall.

EQ, meanwhile, has been identifying advisers who plan to retire in the next two years and pairing them with younger advisers. Succession planning is an area that Beaufort plans to address in the next year or two. Blakeney, at age 40, is the youngest in its team by 15 years.

Despite all the technological developments, financial planning is essentially a people business.

‘It doesn’t matter how many Zoom meetings you have in a year, I still think that face-to-face meeting at least once a year – at someone’s house, in a coffee shop, over a beer, over a round of golf, whatever it may be – has to continue,’ said Blakeney, ‘otherwise we’re just like a robot on a screen and no one wants to speak to a robot every day.’