Adviser Stories: Advice is heading for seismic change

18 March 2019 | Practice Management


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Advisor's typogragphy visual

I've worked in the financial services industry for 30 years. When I first started, the Financial Services Act had just been put in place. It was the beginning of financial services regulation and it caused a huge shift in the industry. I believe that we are now on the precipice of another seismic change – moving from an investment-focused business to more of a planning and consulting profession.

We've seen it in other areas – just look at the film rental and taxi industries. What disruptive start-ups in those industries realised was that people didn't want to stand in a queue to rent a video that might or might not be their first choice, they wanted simply to watch a film; likewise, people didn't want a car, they just wanted to get from A to B. My belief is that a similar process is happening in financial services. People don't want to go to a financial adviser's office and be sold a pension. They want to know: will I have enough? Will my family be ok? We use sophisticated forecasting software to bring clients' financial future to life. Clients love the experience because it brings meaning to their money.

We're at a tipping point. From within the industry, regulation has helped clients understand the impact of costs better. Forces outside of the industry will act as a tailwind, with technology helping to shift the focus from easily automatable skills to uniquely human ones.

This might seem an alarming prospect. But really it's an opportunity. Advisers have the ability to turn what has previously been rather a joyless experience into a meaningful one. Most advisers currently focus on asset gathering because that's where the rewards lie in an AUM-based remuneration model. If you're the person whose assets are being gathered, I can almost guarantee that you are not having a joyful experience. Sometimes the industry has been guilty of treating the money like the client. The money shouldn't be the client – the person should be the client. We demonstrate this to our clients through an unconflicted, client-centred fee model – a flat fee retainer.

Illustration of Alan Smith

Technology will give advisers more time to focus on the skillsets of the future, the things that only humans can do, like listening, asking great questions and really getting under the skin of a client. When I start working with a client, I expect to work with them for the rest of their lives. That makes me curious about them. I want to ask the probing questions that will help me understand what problems they need to solve. If you take the time to really talk to a client about life, family, the future and all the big questions, you're solving their problems and you're creating a meaningful experience for them at the same time.

I can't help but be passionate about the difference that a service like this – comprehensive financial life planning – can make in a client's life. Advisers have a unique opportunity. No one else – no friend, no coach, no accountant – can occupy this place in a person's life. It's a privileged position to be in.

Alan Smith, CEO, Capital Asset Management

Vanguard's Adviser Stories are a series exploring adviser-client relationships.


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Important Information

The opinions expressed are those of the individual author and may not be representative of Vanguard Asset Management, Limited.

Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Conduct Authority.

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