Change afoot
Having this flexibility is perhaps more important than ever.
The advice sector is under greater and greater regulatory scrutiny over good outcomes – the Consumer Duty, now approaching the end of its first full year, and the ongoing Retirement Income Review, being just two recent examples.
Getting the right result, for the right person, in the right way, are what these really boil down to. To achieve these, advisers need control and agility.
At the same time, we’re at an important inflection point for the economy.
‘When thinking about macro-economic factors and the cyclical nature of those, advisers will want to be able to react quickly to those changes and have a range of solutions available to them’.
After a splutter last year, GDP has returned to growth. And, with inflation now nearly at the Bank of England’s two per cent target at time of writing, expectations are high across the market that we’ll see an interest rate cut sometime soon. This will be a milestone that may require advisers and their clients to rebalance their asset allocations and adjust their approaches, which they’ll need choice to be able to do.
Introducing integration
Now, new tools and new products are one way in which the advice industry is giving advisers more choice and more flexibility to help them respond to factors just like these.
But I’m a firm believer that simply creating new solutions will only get us so far. It’s important that these tools work with advisers; that they slot alongside other tools and solutions at their disposal and that they’re ultimately easy to use.
What’s going to deliver this? Integration.
As I’ve previously written, this is something that I believe will make a significant impact on the future of our industry. And this is yet another good example of just how.
Why? Two primary reasons: it makes it easier for advisers to use the choices at their disposal, and it compounds the benefits that these choices deliver.
Let me be clear – creating new products and solutions is in itself something the industry should be doing.
But if all that advisers end up with is an increasingly fragmented, disparate selection of products, then it could end up frustrating progress, rather than supporting it.
Advisers may, ultimately, have to spend more and more time moving from tool to tool, product to product to adjust and adapt portfolios and strategies, and to maintain the critical oversight they need to monitor performance against clients’ outcomes.
By ensuring the easy and swift sharing of data between the planning tools and technology that advisers use to plan for their clients and the platforms - which have done so much to support efficient advice - to execute that plan; we have a real opportunity to unlock efficiencies. Helping improve control and oversight; reducing ‘reaction time’ and enabling more clients to benefit from advice.
Oversight and outcomes
What might this look like in practice?
When thinking about macro-economic factors and the cyclical nature of those, advisers will want to be able to react quickly to those changes and have a range of solutions available to them. Let’s take cash as an example; it’s an asset class that’s seen a surge in popularity recently on the back of flat markets, and as interest rates have climbed.
As part of an overall portfolio, it should, of course, be treated ‘as one’ with other assets a client may hold.
While this isn’t by any means impossible if the assets are held off platform, it might be much more difficult.
Integrating cash solutions within a platform instead can make it easier for advisers to monitor and control the assets their clients hold and make short term tactical changes if client need dictates – both helping to improve good outcomes and unlocking efficiencies.
These benefits are behind the launch of our Money Market MPS on Wrap and Elevate earlier this year.
Closer, together
Delivering solutions that help advisers build more complete, more functional ‘one stop shops’ within platforms is only one part of the integration equation.
Going forward, it will also be important that ‘horizontal’ integration is in place: connections that span and bridge different solutions and services. When both are working well, together, then we’ll be well on the way to busting the inefficiencies that might drain time and profitability, and enhancing advisers’ control, oversight and flexibility.
Changing circumstances mean advisers are always going to need to help clients adapt their strategies and plans.
Designing from an integration-first standpoint is a change that our industry can make to help deliver solutions that really address advisers’ challenges, and don’t just create another ‘option’.
This article originally appeared in Money Marketing in June 2024.