Congratulations, you survived the worst of the crisis. Kids are back at school and a vaccine seems imminent. We can all now see the light at the end of a very long Coronavirus-induced tunnel. But don’t let complacency set in!

I’ve been reflecting on the podcast interview I recorded with Geoff Towers in which he said firms don’t fail in a downturn, they fail coming out of a crisis.

In today’s newsletter, I will focus on what financial advice firms are doing – and need to do – to emerge from the crisis stronger. But it is worth first reminding ourselves of our present reality.

Where we are now

Demand for quality financial advice is strong but in short supply. Financial advice businesses have weathered the Covid storm well but some, particularly small firms, are struggling. In a soon-to-be-published PFS-NextWealth research report we reveal that three quarters of financial advice businesses have been negatively impacted by Covid-19 with one third predicting a decrease in gross revenue of 20% or more. New business volumes are down but rising and the cost of regulation is crippling for some.

None of this should come as a surprise. But back to Geoff Towers’ sage comment – firms fail coming out of a crisis, rather than through the crisis. So what do firms need to do to prepare?

Preparing for the future

Two and a half years ago, I set up NextWealth to help firms thrive amid disruption. Our mission has never been more relevant. Firms across the wealth management chain need to challenge operating models. Heinz is selling baked beans and Pepsi is selling fizzy sugar water direct to consumer, for crying out loud! What are you doing to adapt?

We’ve been doing some work on a new operating model for financial advice businesses. Details will follow in due course. In the meantime, the trick is to focus on the overlap between what matters and what you can control. Carl Richards illustrates this perfectly:

Here are two things to start to think about:

1. Map your workflows and identify bottlenecks

Harvard Business Review published some fascinating research last week showing that knowledge workers are more productive when they work remotely. Our research shows that financial planners expect new working practices will be one of the most important lasting impacts of Covid. 

But it’s not just about where you work, it’s about how you work. In our research with the PFS, we found that most have started the process of mapping out workflow processes involved in delivering a financial plan, but firms need to go further. Less than a third have so far identified their bottlenecks and looked at key areas for improvement. 

2. Evaluate new tech by how well it integrates with your existing set-up

Our latest work on adviser tech reveals that change is afoot. Over a quarter of financial planners expect to add a new technology partner in the next year. That is up from 10% last year. 

Implementing new technology isn’t easy. Financial advisers tell us that the lack of time to learn and implement new technology is the biggest barrier to changing tech provider followed closely by a lack of integration. 

NextWealth’s top tip to firms implementing new tech is to figure out what you actually use that works well and build from there. Our view is that advice tech is moving from hub and spoke toward integrated systems. This is a big change but will take time to unfold. We’ll be writing more about this in November’s newsletter – subscribe here

About the Author

Heather is a data and research expert specialising in retail investment distribution. Heather is the Managing Director and Founder of NextWealth. She is also a Director of Clive Waller Consulting Ltd and serves as Vice-Chair of The Investment Network and the Schroders UK Platform Awards.

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