The retail financial advice landscape has changed remarkably in recent decades, specifically the regulatory framework and the tools, technology and processes used to deliver advice.
While regulatory pressure is a constant concern, the business of providing financial advice is benefiting from the adoption of technology.
This is something that is likely to continue, requiring advisers and planners to become increasingly savvy about the digital solutions they embrace.
Technology is a good thing for advice businesses and we are excited by some of the innovative solutions coming to market. Some replicate existing approaches to advice, automating steps along the way. Others, such as Ignition Advice and InvestCloud are helping firms reimagine the way advice is delivered – making the best use of tech and humans.
This will usher in an era of innovation that will make advice more accessible to the masses but might also put pressure on price and client experience.
How can financial advice businesses and employees of those businesses prepare? No doubt the change will require some tech upskilling, but just as essential will be developing the soft skills so important to building a trusted client relationship.
What are soft skills?
Soft skills are elements that many financial advice professionals find hard to define, yet they lie at the core of what they do.
In a report NextWealth produced for Fidelity Adviser Solutions in 2020 (Skills of the modern financial adviser), we explored the skills that are essential for success in today’s business environment.
We found that some important elements have remained unchanged, even though providing advice today is far less about sales and much more about planning.
Understanding the client’s needs and suitability, navigating the field of available products and solutions, and making and reviewing recommendations all remain essential to the advice process.
The report listed the following elements as core skills for financial professionals. Aside from numeracy and technical understanding, all are firmly rooted under a ‘soft skills’ heading:
- Great interpersonal skills
- Relationship building
- Numeracy
- A level of technical understanding of financial products and regulation
- The ability to translate the complex into something that lay clients can grasp and buy into
Two crucial soft skills include
- Empathy
- Coaching and the emotional intelligence to discuss client’s goals, fears and the outcomes of life-changing events
Due to the dynamic nature of today’s world and the seemingly unrelenting challenges we are all facing on a daily basis, clients are turning to their financial planners not just for reassurance on their investment strategies, but also for a deeper conversation about their concerns for their families and businesses and the uncertain future they are facing.
Around the time we were working on the report for Fidelity Adviser Solutions, PortfolioMetrix was exploring the importance of defining the value of advice. In a survey it released from its report, which 194 advisers completed, soft skills scored the highest and ranked in the top three:
- ‘Empathy’ was top, with 76 per cent of respondents including it in their top five.
- ‘Understanding a client’s life goals’ was second, with 49 per cent of the votes.
- ‘Simplify’ and ‘Peace of mind’ were joint third, with 47 per cent of the votes.
Other elements that scored highly included:
