Where is financial advice going?

1. Where is financial advice going?

2. vs
“We didn’t do anything wrong,
but somehow, we lost."
- Stephen Elop
Nokia CEO

3. Regulation
Outcome-based investment
Technology Engagement
Source: Old Mutual Wealth Strategic Partner Council; PWC Asset & Wealth Management Survey 2017

4. WHAT DRIVES CLIENT LOYALTY?
Company and
Brand Impact
Product and
Service Delivery
Value-to-Price
Ratio
Advice
Experience

5. WHAT DEFINES A GOOD CLIENT EXPERIENCE?
Service
Tailoring & Teaching
Investment Returns
20%
54%
26%

6. Return on
Investment
Return on
Advice
Total
Return

7. ADDING RETURNS THROUGH ADVICE
0
1
2
3
4
5
6
7
8
Average Balanced Investor Return Expectation Framework
Max Tax Efficiency Dynamic Withdrawal Strategy
2.6% 2.6%2.6%2.6%
1.3%1.3%1.3%
2% 2%
1.5%
Average Aggressive Balanced
Fund Real Return
The
‘Behaviour
Gap’
-1.4%

8. DISTRACTIVE RISKWhat we see
How we
react
Our
investment
portfolio

9. source: The Behavior Gap Carl Richards

10. ADDING RETURNS THROUGH ADVICE
BEST PRACTICES
TO AVOID
MONEY-LOSING
BEHAVIOUR
Set expectations below
market indices
Control exposure
to risk
Monitor risk
tolerance
Forecast return
probabilities
Source: Dalbar Report, 2014

11. MANAGING EXPECTATIONS

12. ADDING RETURNS THROUGH ADVICE
0
1
2
3
4
5
6
7
8
Average Balanced Investor Return Expectation Framework
Max Tax Efficiency Dynamic Withdrawal Strategy
2.6% 2.6%2.6%2.6%
1.3%1.3%1.3%
2% 2%
1.5%
Average Aggressive Balanced
Fund Real Return
The
‘Advice
Gap’
+4.8%
The
‘Behaviour
Gap’
-1.4%

13. TAILORING & TEACHING
or

14. THE ROLE OF TECHNOLOGY
■1/3 of clients say that they will switch advisers if
technology is not used to enhance their advice experience
(46% of clients < age 53)
■Practices that cater to clients under the age of 45 grow at
14.1% vs 7.7% for those that don’t
■By 2024 100% of advisers are projected to do goal-based
financial planning
■Advisers that embrace technology have 40% more assets
Source: Fidelity Insights on Advice 2013; Financial Advisor Magazine, Technology Grows Financial Advisors’ Practices,
2015; InvestmentNews, Firms with younger clients grow faster, 2015; Morningstar The Future of Advice,
Anthony Serhan, 2016

15. ‘USING TECHNOLOGY’ IS LIKE GETTING A TAXI
vs.

16. ROLE OF TECHNOLOGY

17. Client Technology
Convenience oriented
- Online access, tools, apps
- About information
Confidence oriented
- Goal-focused
- About confirmation

18. KEY PLANNING CONSIDERATIONS

19. IMPACT ON INCREASED SHARE OF INVESTABLE ASSETS
≈ 3x

20. IMPACT ON CLIENT LOYALTY

21. ‘If you can't explain it to a
six year old,
you don't understand
it yourself.’
- Albert Einstein

22. THE IMPACT OF TAILORING AND TEACHING
Low vs High
Referrals Stickiness FUA p/c Share of Wallet
2.6x
1.4x 1.5x 1.4x
Low vs High

23. HOW TO WIN IN THE NEXT DECADE
1. Focus on the stuff your clients value most
2. Articulate, deliver and demonstrate your value
3. Manage investment expectations
4. Goal-based technology and investments will rule

24. You can’t change the direction of the wind
but you can adjust your sails