Why remote advice is here to stay

There are many reasons why we’d all prefer to forget the year just gone.

But in decades to come, the advice industry in particular may look back at 2020 as a key moment in its evolution.

What was unusual just 10 months ago – taking financial advice without ever meeting the adviser in person – has become temporarily the norm.

And although not everyone has been happy with this way of working, most have found ways to make it work, and some advisers have even identified advantages in this approach. Advantages that they may wish to hang onto, even after the virus has been wiped off the face of the earth.

Face-to-face advice isn’t going anywhere. But remote advice is now very much here to stay, and what was a sad necessity in 2020 is now a massive opportunity. Here’s how the revolution swept us all up with it – and how to stay on board.

How the time came for remote advice

Revolutions and earthquakes don’t happen overnight – they just seem to. Change is usually brewing for years and even decades, held back only by various obstacles or braking forces. Then something happens to overcome these obstacles, and the earthquake hits.

All the mechanisms for making remote advice mainstream were already in place before the pandemic. The obstacles, such as they were, turned out to be minor compare to the realities of lockdown. But five years earlier, in its report ‘The Virtual Financial Advisor’, consultancy firm McKinsey proposed that the future of financial advice lay online, and presented a huge growth opportunity. From our vantage point in 2020 it makes striking reading.

Among its key findings were that:

• A majority of people under the age of 70 were happy with the idea of remote advice
• People were happy with remote advice at all asset levels, with the wealthiest the most comfortable of all
• Around 42 million households worldwide were prime candidates for remote advice
• The number of advice clients was growing at a faster rate than existing advice providers could sustain on a face-to-face basis (US figures)
• 20% to 30% of affluent consumers – a ‘critical mass’ – would use a financial adviser not based locally, and more were open to the idea

The McKinsey study suggests back in 2015 that it wouldn’t take much to open the floodgates on remote financial advice. The Covid pandemic has done just that – and it would be naïve to think that this flood will ever be dammed up again. The advice landscape has changed forever.

‘Person to person’ – the Black Lion strategy

The pandemic put remote advice to the ‘sink or swim’ test: advisers had no option but to try and make it work, regardless of whether they considered it a good idea. Fortunately, many have found that – despite certain drawbacks – remote advice isn’t just a passable substitute for face-to-face, but actually has a number of advantages to offset its downsides.

One advice firm that has made significant strides here is Black Lion Wealth. IFA Kay Mechial explains how they’ve preserved the benefits of ‘face to face’ advice by adopting a ‘person to person’ approach. He says, ‘The biggest perceived barrier to providing remote advice is the fear of losing the personal touch.

There’s no question that face-to-face advice has some advantages over remote advice – the most important being the ease of building trust. But it would be silly to pretend that the reverse isn’t also true: remote advice can sometimes be preferred.

As we found, if given the choice many of our current clients would like a blend of the two. We’ve found that what matters is not so much seeing someone in person, but simply knowing that person. That’s what creates the personal touch, and that’s what remote advice needs to emulate.’

Furthermore, in developing their remote advice function, Black Lion have identified a number of clear upsides, such as:

• Less travel time: Meeting remotely saves the advisers and/or clients between 36 and 47 minutes on average, not to mention travel and parking costs. This also has the effect of increasing adviser capacity.
• Clients sometimes prefer it: Black Lion found that 73% of their clients were happy with taking some of their advice remotely, and 34% said a blended approach was best.
• Higher availability and flexibility: Clients find it much easier to arrange a time when they are free, as meeting can now be conducted in an hour or less, rather than having to block out half a day. This in turn gives more time for consultations.
• Better family engagement: Black Lion have seen a rise in the number of clients who consult them alongside their spouse or partner, as it’s now much easier to arrange appointments together. Advice received as a couple can be much more beneficial, as the adviser can take both sets of needs into account.

Kay says that remote advice won’t replace face-to-face at Black Lion, but be a valuable addition to it. He explains, ‘We’ll be broadening the options for our existing and new clients. We aim to develop (subject to compliance) our own software that not only allows for remote advice, but also enables clients to sign documents and letters of authority on a shared screen. We’re also setting up a remote desk for clients based elsewhere in the country – but we’ll still provide face-to-face advice for those who want it.’

Firms waking up to remote advice potential

Financial services software firm Intelliflo is likewise convinced that the remote advice trend will outlast the pandemic. In its ‘Future of the Office’ report it found that more than half (53%) of adviser firm employees were set to work remotely in the long term, either wholly or in part. This is thanks to the great strides that have been made in remote working capacity: 84% of firms say they are now fully equipped for home working, compared to just 47% before the pandemic.

Respondents to the study identified the core advantages to remote working – more time with clients and less time and cost spent travelling – and also highlighted several more, including:

• Spending less on office space (and more on things like technology, cash reserves and employee wellbeing)
• Targeting a wider geographic client base
• Increasing diversity in the industry (e.g. attracting more staff with family commitments)

A majority (57%) expected remote working to increase even post-pandemic, while 68% believed that fewer face-to-face meetings with clients would become ‘the new normal’.

Unbiased plans for expanding your reach

The enforced shift towards remote advice may yet prove to be a blessing in disguise. As more consumers turn towards advice to help with their increasingly complex finances, the growth in the market may outstrip the capacity of advisers to meet everyone in the ‘traditional’ way. Advice needs too are evolving, as pension freedom and auto-enrolment force more consumers to get actively involved in financial decisions. The future of financial advice itself may change as a result.

Some business models may move away from a smaller number of high-value clients towards a larger number of clients needing less in-depth advice, and paying slightly lower fees. Others may continue to focus on the high-value clients, but will be competing for their custom across wider geographic areas.

Anticipating these developments, Unbiased has recently created new plans for firms that are ready to benefit from the remote advice revolution. The Growth plan allows advisers to appear by default in two locations (not just one postcode), with the option to purchase up to two extra locations, for a total of quadruple the coverage of a standard Essential plan.

Furthermore, larger firms can take out the Enterprise plan for a truly nationwide presence. Enterprise offers the power to promote your services across up to 300 postcodes, allowing expansion of your client base on an unprecedented scale.

As the Mckinsey research in 2015 made clear, a move towards more remote advice was always an inevitable trend. And while both advisers and clients might have preferred a slower transition, 2020 has thrown the industry in at the deep end. It’s encouraging to see that many are swimming a lot better than they might have expected – provided they have the right tools to keep developing their business through these turbulent times.