True Potential is one of the nine firms accepted onto the FCA's robo-advice unit – why did you apply what did the process entail?
One of the principles that True Potential was founded on was that technology could empower clients, free up advisers and bring down costs. It’s why we developed impulseSave, which enables clients to top up their investments by themselves from £1 up to £99,000, but the adviser is also close by and in the loop. We have seen that develop and the model we have today is that clients do some things on their own and use their adviser to keep them on the right track when they are making bigger investment decisions.
No one is yet able to offer a true algorithm-based advice process but at True Potential we’re not far off. We have a team of expert in-house developers and data scientists. They will crack it and we want to work closely with the FCA to get it right for the client.
Can you tell us a bit more about your proposition and what you hope to achieve?
All our clients have their own portal, whether they are advised or self-directed. That means they can get instant valuations via their smart devices and make adjustments with impulseSave. Our proposition is also built around another of our principles, which is goal-setting. Clients are asked to set an investment goal and they can then track their progress towards hitting their personal goal. That’s really important because to invest successfully, you need to know where you are – the valuation; you need to know where you’re going – the goal; and you need the ability to stay on track – impulseSave.
Advisers have a crucial role in getting their clients up and running. A bit like a driving instructor, they show you how to do it. But advisers don’t have the time to manage every small top-up and it wouldn’t make financial sense for the client either, so the client needs a level of control.
Self-directed clients using our execution only service, True Potential Investor, can manage their process on their own but help is at hand if they need guidance. They can open a video chat at any point with someone who will guide them through the process.
So we think this proposition is the best of both worlds. It’s a hybrid model that brings together human interaction with technology. We are working with the Advice Unit so that we can be confident that the algorithms and data science that we are working on to advise clients digitally are compliant. But we think in the end, people will always want some human interaction for bigger ticket investments.
How do you think the financial advice market will change in the near future and what would you like to see?
Some people think technology will kill the adviser market. We completely disagree and what is currently presented in the industry is a false choice. It assumes that people will either be advised or will use technology alone. That’s just not how people behave so we are doing what we’ve always done – building solutions around the end client and their behaviour.
The hybrid model is what will emerge when the hysteria around ‘robo’ settles down. We know from our own Savings Gap research involving 22,000 people, that once you get past £1,000, people start wanting to speak to another human.
So while it will be possible to offer a technology-based advice process to clients wishing to take that route, our vision will mean that the human adviser is always close by because clients want that reassurance.
How will technology continue to improve the way the financial services industry works and how should brokers be utilising new technology?
Clients expect to be able to access information on the go and to interact. One of the reasons that people don’t save is that it is often a cumbersome, paper-based, annual statement process. That doesn’t work in 2016 and clients rightly expect better. Technology is smashing through that and we see the effects of it. Our clients log in on average weekly, check how their investments are doing and make top-ups with impulseSave. Around £4m is impulse saved each month and half of that is in amounts of £50 and under. We think that actually enhances the relationship with the adviser who empowers his or her clients but is always there to help them reach their goal.
If you could see one headline about financial services in 2016, what would it be?
I never make predictions but I’d like to see our vision of hybrid advice make the headlines. Yes technology will exist that offers algorithm based advice and True Potential will be at the front of the queue. That’s why we’re working with the Advice Unit. But we see technology and advisers working side by side.
Robo is a buzz word for the moment. Hybrid is here to stay. There’s a headline I’d like to see!
