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JUN 10, 2021

The rise of
Financial Coaching

Alexander Cassar

Chief Business Operation Officer

Reading time: 2 min


The challenge with Compliance is how do we really know that we are complying or not?

This is where RegTech can help but, it is untested waters to a certain degree. We believe the vast majority of Wealth Management professionals are willing to do the right thing for sure. But we have to move away from a transactional approach and instead challenge oneself to make sure we are doing the right thing for the client. This is one huge step for the UK Private Wealth industry in the current situation. The industry players need to auto-scrutinise themselves, for instance, investment product providers need to know the target market criteria.

The problem here is with the market intelligence these players receive. As there is no UK-wide system to capture all this, we see the need to segment clients in a way that mirrors the products. The industry is transactional by nature, segmenting by assets. By doing so, these players can showcase that they are putting the client’s needs at the heart of their business by ensuring the investment product is fit for purpose.

Suitability Framework

The above underlines the fact that if the advisory process does not match clients’ needs then there is no incentive for Wealth Managers to send such investment product information packs to their clients. In other words, is the advice that the Relationship Manager is giving suitable for their clients’ needs?

This brings us to the investment proposition and the governance process surrounding that proposition. Remember, with SMCR we now have a judge in place to check if we do have the right products in place!

Now in a vertically integrated model between investment product manufacturers and distributors, there should be no blocks to communication at all as all the data should be in one place. The control mechanisms should be smooth so manufacturing and distribution data become one. In such a scenario we believe it should work with variants on R2C (reporting to clients).

The Financial Coach

In our opinion, the way forward for the UK Private Wealth proposition is the Financial Coach; the other being the lifestyle financial planner. The Financial Coach focuses on the relationship with the client supported by systems that streamline the advice process (e.g. robo advice).

This coaching should have a holistic approach making sure it blends with the existing relationship with the client. As acquiring new clients is becoming harder than ever before, the Financial Coach must ensure that the advice process is not just suitable but tailored to the client’s personal needs. To achieve this, the Financial Coach needs access to client data.

For example, let us look at the disclosure of charges. We enabled a pan-European Wealth Manager to build a digital platform where they could promote both their investment products as well as other third parties. Through the online portal, they launched a robo service and all they were really doing was distributing their own ETF funds. Thanks to the automated robo service they achieved efficiencies in disclosure of charges.