Access, education and trust are key for advice uptake

The future of finance advice white paper by the World Economic Forum highlighted how the advice landscape is changing in the information age. 

Although the landscape is changing, the goal to improve individuals' wellbeing and decision-making remains consistent, according to the report. 

It highlighted how the increasing availability of information sources, including social media platforms, is prompting individuals to seek knowledge and ask questions about financial matters.

While evolving models within the financial advice landscape are shifting how trust is earned and kept.

Some 79 per cent of retail investors stated that being able to speak to a financial adviser was important in making an investment decision while 47 per cent found that an adviser was an extremely important source when making investment decisions. 

According to WEF, financial literacy is “critical” to the effective use of financial advice and empowers financial wellbeing with financial advice as a complement (rather than a substitute) for this.

The report highlighted six trends shaping the industry which included:

• As life expectancy increases and wealth is transferred to other generations there is a need for innovative financial advice to help investors prepare for long-term financial resilience.
• Holistic financial advice has the potential to help individuals achieve financial wellbeing.
• Individuals increasingly expect digital accessibility and hyper-personalised advice.
• Industry dynamics, regulatory reforms and technological advancements are driving a rise in transparent and flexible pricing models.
• The use of technology can unlock the potential of advice by increasing adviser productivity, reducing costs and improving access.
• Influencers and social media as a new paradigm for financial information.

Calls to action 

Based on the trends above shaping the advice profession, the WEF has issued some calls to action for firms to implement to evolve with the changing landscape. 

It said firms should build diverse adviser teams by focusing on recruitment, development and retention to better reflect and serve investors.

They should also set actionable targets, measure progress and train current advisory force on historical barriers to entry for diverse candidates.

Advisers were urged to focus on contextualising financial information to better enable individuals to understand their financial picture, including acknowledging how emotional states affect their decision-making.

As firms roll out digital solutions, the WEF said they should anticipate and embrace receiving digital feedback and iterate on this to help amplify and improve their digital offerings.

On pricing, the WEF urged firms to look at how their business models could be further evolved to enhance access to investors as well as identify and enhance their strengths by communicating value clearly. 

The report also called for firms to understand and develop a secure AI-enabled digital core and reinvent ways of working by hiring and training a future-proof workforce by making technological skills a requirement. 

alina.khan@ft.com