By James Tucker, CEO of Twenty7tec
It is generally accepted that the earlier people start saving for their retirement, the better. Yet many people don’t have the financial capacity to save early in their career, or they prioritise different aspects of their lives when they are young.
With commentators now suggesting that the UK pension age could soon be raised to 70, more people may therefore need to consider a private pension if they want to retire while they are young enough to fully enjoy the benefits.
This represents an opportunity for financial advisers to use the latest technology in order to help people who are midway through their working life or nearing retirement to get the best advice. That is because, while technology obviously cannot retrofit for people who didn’t save earlier in their careers, it can greatly assist advisers in providing individually tailored advice based on their clients’ personal circumstances, which is crucial if clients are to achieve the best possible outcome and close their savings gap.
In this context, where technology really shines is its ability to facilitate better communication between adviser and client. For example, one of the key benefits that modern adviser technology brings to the advice process is that it does not forget and never misses a step: it is set up in such a way that advisers always know where their clients are at in their financial journey and life journey, prompting them to ask the right questions at the right time and in relation to the right subject matter.
When relying solely on their own skills and knowledge, even the most experienced and accomplished of advisers can forget to cover an important aspect that might affect client outcomes further down the line. But by structuring and formalising the advice-giving process into discrete steps, technology guides advisers through every stage of the consultation, thereby ensuring that they gain a comprehensive understanding of the respective client’s financial circumstances.
Technology is also very useful when it comes to highlighting to clients the behavioural changes required to save more effectively for their retirement. People who haven’t got into the habit of regularly putting money aside each month may need a helping hand to see the bigger picture and begin investing in their long-term future. Here too, technology facilitates the communication between adviser and client, assisting the former to proactively help the latter make better financial decisions by providing data-driven insights.
For example, advisers can avail themselves of cashflow planning tools to showcase to clients the impact of missed savings on their pension pots and how this will affect their income in retirement. And tools such as newsletters allow advisers to keep financial health front of mind among their clients on a regular basis and underline the benefits of short-term sacrifices for medium- and longer-term gains, which helps their clients make sound decisions over an extended period.
We only need to look at the efficacy of reminders about the annual ISA deadline in getting people to pay into their savings vehicles to see how small nudges can have a big impact on people’s behaviour, helping them improve their savings habits.
However, for all the myriad of benefits that technology brings, it can never be a substitute for the essential human element that clients crave. Advisers therefore need to make sure that technology serves as a tool rather than a crutch in their professional practice: it can tell them what to ask and when, but it is still up to the adviser to actively listen to their clients’ answers, pick up on subtle nuances, and guide the conversation accordingly, with empathy and common sense.
When in doubt, it is therefore always better to pick up the phone, host a Zoom call, or organise a face-to-face meeting, rather than relying on technology to do the heavy lifting in the client-adviser relationship. Automated tools and email marketing systems support advisers in a broad set of activities, making their work much more efficient and freeing them up to concentrate on forging strong client relationships through one-on-one interaction.
Ultimately however, it is about making the time that advisers spend with their clients more effective, helping them put in place the right strategy for them, in order to ensure their retirement is as they would wish it to be.
