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AUG 01, 2022

Winning the IFAs’ digital challenge

Alberto Cuccu

Chief Executive Officer

Reading time: 2 min


Objectway features The Wealth Mosaic UK WealthTech Lascape Report 2022 to dive deep into the role and relevance of the growing range of technology within the UK market, particularly investigating the shift to digital-first advisory models that enables IFAs to conduct more business through investment management platforms.

How to gain a competitive advantage from what’s going on

Over the past decade, both advisors and direct retail investors have increasingly favoured platforms as the designated channel to access investment products. The attractiveness of platforms is chiefly driven by the investment fund range they offer.

A further consideration is investment fund returns. Beyond products and performance, low costs are still quite decisive to advisors. Looking at the bigger picture, clients’ preferences are for specialist advice and additional expertise where it is not available in-house.

According to research, more than half of IFAs operating in the UK market will increasingly rely on third parties. The vast majority will access these third parties digitally via investment platforms on a daily basis and using multiple partners, this way differentiating their business.

Investment managers need to take note of this. IFAs are a key distribution channel for them, so understanding IFAs’ preferences is crucial for investment product providers wanting to expand their distribution reach.

Being in constant contact with clients is a must for any financial advisor, but many fail. If things are ticking over nicely it is tempting to get in touch only when there is a problem. Today’s clients expect more. They want a relationship with their advisers and they also want some choice over how and when to communicate. Having an omni-channel client relationship is more necessary than ever, particularly since the pandemic. If IFAs do not keep up with the new technology, they are more likely to lose their clients.

Onboarding is another area to watch out for. If the entire process is clunky and slow then there is the danger of losing the client before they have even signed up in today’s digital-first world. Onboarding and client reporting should be paperless, and include digitally signed proposals and contracts.

Another issue is how financial advisors address intergenerational wealth transfer, which is a pounding topic these days. According to Schroders Survey, three quarters (74%) of advisors view wealth transfer between generations as an opportunity for their business.

Indeed, there’s a new generation entering the investment scenario and inheriting the wealth. Beyond the traditional way of investing, the new generation value and expect an ongoing engagement with their advisor. If not met, this expectation may lead to choosing an online or hybrid advice solution rather addressing to their parents’ long-trusted advisor.

However, when it comes to engagement only around one in three advisors said they have a specific proposition for addressing the transfer of family wealth to the next generation.

What’s more, very few have a sales and marketing strategy specifically aimed at younger investors. This is further supported by the survey results indicating that the percentage of advisors that will accept new clients with less than GB£50,000 has been continually declining and is now at just 39%.

These key strategic priorities could be addressed with an incremental and agile approach to digital transformation, providing anytime and anywhere omni-channel advisor/client digital portal, paperless client onboarding together with mandate set-up solution and digital client engagement portal with apps enabling clients to access and manage investment information in collaboration with the IFA.

Next steps could be incremental releases to fully/digitise all client lifecycle management processes, to increase profitability by reducing operational costs.