Current market trends: A Q&A with Simon Bussy from Altus

We like to keep up-to-date with the latest market trends here at Timeline. So when we got the opportunity to chat with Simon Bussy who heads up Wealth at Altus, we leapt at the chance.

Simon is a highly experienced strategy and business change consultant and authority on evolving Digital (‘robo’) Advice sector, with an outstanding track record of achievement pre-Altus with the likes of HSBC and Zurich Insurance.

Our chat covered everything from how COVID has accelerated digital projects and automation to how goal-based planning is becoming far more prevalent in the financial sector. Without further ado, let’s hand over to Simon:

We could talk about this one for the next half hour, so I’ll try to share those trends we’re seeing as a consulting business that perhaps are in addition to those that get regularly reported in the media.

Since we all went into lockdown last year there’s been a very definite acceleration in digital projects and automation – from major transformation programmes to smaller, more focused projects, for example around digital or hybrid distribution, and the development of mobile propositions, the customer experience and the underlying infrastructure.

Our technology and digital team has also supported some of the more critical ‘keep the lights on’-type engagements around technology infrastructure and security that support client operations on a day to day basis, especially now that many employees are working remotely, and this (in some form) is likely to become the ‘new normal’ for many.

Interestingly, topics that were often not seen as a priority by some clients pre-COVID – digital signatures is a great example – are now receiving far more attention, while legal contracts, which clients often insisted had to be ink signature approvals, are now all completed using DocuSign.

In work close to my own heart – digital propositions – there’s been a recognition by many players that a hybrid solution in some fashion is the ‘go to’ model, at least for now. Such a model can be very supportive of adviser firms, helping to make them more efficient, productive, profitable and more robust (from a risk and compliance perspective) - by taking the heavy lifting off them and allowing them to focus their time on what they do best – developing deep client relationships, understanding their current situation and future dreams and needs, and then putting in place a plan, providing quality advice.

One of the challenges of many propositions we see – including those that are pure digital – is that they can be really dull, unengaging and often, pretty confusing - I can’t believe I’m still saying this in 2021! And businesses wonder why they don’t hit the numbers in their business plan!

Fortunately a number of businesses have woken up to this and it’s no surprise that our behavioural consultant is now working with some of the biggest brands in the UK and Ireland, amongst others, to help them resolve this. This approach considers things through a behavioural lens - shape, colour and content - and it’s amazing to see how recommended changes can make a real step change in client behaviours and actions!

Elsewhere we’re having far more conversations about open banking and open finance – not just what it is, but more around the practicalities of how this can be used to support the whole advice process – whether it be reducing time completing fact find information, or making better, more informed decisions.

Investment Pathways - so far - have been a bit ‘meh’, while ESG is absolutely the hot topic - whether it’s clients wanting to understand what’s really going on, designing new propositions, or understanding the data at a more granular level.

As with everything that gains attention, the key is to distinguish between those where this is part of their company values and DNA and those that have jumped on the bandwagon and are merely paying lip service.

Elsewhere in the investments space, Direct Indexing is also a topic that is gaining traction on more agendas.

In the at- and post-retirement space, drawdown remains the ‘go to’ solution for many, and there’s increasing talk of CRPs (Centralised Retirement Portfolios), albeit not as much as perhaps I’d expected. Interestingly, we’re at last beginning to see income in retirement propositions that recognise there’s more to it than just the person’s pension pots! And after a bad press for a number of years, equity release and lifetime mortgage propositions are finally going mainstream, and we’ve supported some major clients in developing their proposition and operating models through to implementation.

To finish on a topic at national level – the ‘Buy now, pay later’ solutions appear to be getting some worrying momentum and gaining in popularity. Conversely, it’s also noticeable that savings as a nation have increased while we’ve all been in lockdown. But, have people really adopted new savings behaviours, or will they blow the lot as soon as we’re all free again?!

Even without these national trends, the whole topic of vulnerable customers is also high on the agenda of many organisations - identifying them (especially now we’re in an increasingly digital environment), engaging with them in an appropriate manner, and dealing with them in the right way to achieve the right outcomes. Another area where we’ve seen a noticeable increase in client work.

How do you see this changing the landscape of financial planning?

The conversations we’re having suggest that the larger adviser firms are becoming increasingly structured in their approach. Goal-based planning is far more prevalent than it used to be, and for many firms, designing propositions where the operating model has been carefully thought through and the tech is properly integrated and ‘talks’ to each other - end to end - really does provide significant benefits.

Elsewhere, the hybrid model - where the tech provides more support to the adviser, and in some cases, is even able to provide the advice in more simple situations - is an interesting development and one we’ll see far more of. And of course, in time, the much hyped developments in the fields of AI and Big Data will begin to become more of a reality than merely a conference PowerPoint slide! Not surprisingly, data strategy is typically one of the high profile workstreams in the transformation programmes we get involved in – data is literally at the very heart of what we all do on a daily basis!

What are advisers doing to prepare for the FCA’s up and coming focus on sustainable withdrawals?

‘4% safe withdrawals’ is still something I see talked about in the press, and it does make me shudder to think of the impact this could have on many families. That 4% view is from a bygone age - a different time, and very different markets and economic conditions. Of course, ‘rules of thumb’ are helpful for people, they provide a useful, if generic, guide, a ballpark number if you like.

Personally, something much closer to 3% would make me feel more comfortable - as a rule of thumb. But that’s all it is, a rule of thumb. In an ideal world people would speak to an adviser to model it properly. We’re all different, of course, we all have our individual needs and wants and pressures on our finances, and the only way to get real comfort is by speaking to an adviser who uses a sustainable withdrawal tool or modelling tool.

The challenge of course is for those people who can’t afford to see, or who choose not to see, an adviser. It will be interesting to see the uptake of Investment Pathways, and how they evolve over time.

Do you think Timeline has a part to play in the current market, if so how?

There’s no doubt the Timeline app and other modelling tools are beneficial for advisers. As always, advisers need to do their homework, their due diligence on any piece of tech they might be thinking of using. They need to understand any assumptions and limitations, as well as what it does well.

Provided the adviser fully understands and takes responsibility for the tool they’re using, and can properly explain the output to their client - with the caveats previously mentioned - then tools such as Timeline will prove beneficial.

Design, of course, is critical. There are too many tools around that are very clever but very obviously developed by actuaries and technology nerds, but with no ‘real life’ design experience. I’d always encourage getting a behavioural designer on the team to help get it ‘right’.

How are advisers trying to drive engagement, given the current saving levels?

Many advisers focus on the wealthy 50+ age group, the pre- at- and in-retirement markets, where the real money and assets are. An unintended consequence of RDR, perhaps? In many cases, the low savings levels of the masses do not concern a significant number of advisers - quite simply, the masses are not the target market of these advisers.

The ‘robos’ were supposed to fill the gap, but in most (not all) cases these have been poorly designed and executed, and a number have exited the market. Interestingly, the move towards a hybrid digital/human model will enable more people with fewer assets to meet the requirements of some advisory firms, and certainly, some of the larger vertically integrated businesses see this as a potential new business opportunity.

A recent stat shows the average adviser uses 2.7 pieces of technology, would you agree with that?

2.7? No way! It’s far, far more than that! Maybe an average of 2.7 platforms? But if we’re talking technologies, there would be upwards of 20 or more in most firms. Let’s list some of them:

  • Two or three platforms for different client segments
  • At least one client management system, perhaps with a client portal
  • Digital fact find, possibly with open banking capability
  • Possibly a campaigns capability if that’s not built-in elsewhere
  • Risk assessment tools to cover both investment risk and capacity
  • A cash flow modeller
  • A range of savings tools and calculators
  • A range of tools to support the investment process – from portfolio analytics, modelling, construction and management tools to fact sheets, KiiDs and more.
  • Retirement modelling tools – for both accumulation and withdrawals
  • For some advisers, a DB assessment tool
  • Perhaps a ‘robo’ capability
  • Workflow tool
  • A Suitability Letter generator
  • A review letter generator
  • Microsoft Office or equivalent
  • Finance systems
  • Mobile phone, laptop, desk phone…

That’s taken, what, 30-40 seconds to make that list? There will be many more, I’m sure!

Some of these may come as part of a package - with a platform, for instance. Poor integration experiences have driven some firms to try to source as much as possible through a single supplier. Other tech solutions, including new services, will be standalone.

The technical architecture of the business - that is, how the many and various systems, platforms and bits of kit are integrated - or not - will define how efficient, robust and profitable that business is. Two-factor and multi-factor authentication methods need to be considered, while the move towards a single digital identity will gain a head of steam over the coming year or so.

What would be the ideal tech for advisers, in your opinion, that would give them and their clients the best outcomes?

The ideal tech will differ from adviser firm to adviser firm, and will depend on their target markets, their value proposition, their areas of focus. What I will say though is that an adviser firm - perhaps with the help of an external specialist - should map out their entire operating model, and identify all the capabilities they need to deliver their proposition to their clients. Everything.

And then illustrate how the technology solutions they have already align to delivering the proposition. Where are they strong? Where are there overlaps, gaps, or weaknesses? What’s integrated, and what is manual or needs to be re-keyed? What’s modern and fit for purpose… And what’s hanging on for dear life?

It’s always worth remembering that technology is just an enabler, it’s there in the background doing the grunt work, the heavy lifting. Get it right - and that includes proper integration - and both the adviser and client get real benefit.

Kate is Business Development Manager at Timeline.

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