The demise of financial advisers has been predicted so many times that we have become accustomed to people crying wolf.
That said, it is important to remember that eventually there was a wolf and there is a danger ignoring these warnings completely will end up with us being eaten.
I have been very sceptical of what many see as the biggest threat: robo-advisers. However, I am concerned about the announcement of Aviva’s new Alexa skill, which allows clients to access their pension valuations from their smart speaker.
I am a big fan of my own Alexa and with the advance of smart tech, increased integration, artificial intelligence and machine learning, I can see a future where many people conduct their own financial planning via their smart speaker.
The problem robos have is one of engagement. You have to proactively log in, input data and answer some questions online.
While this will get better with even greater integration (apps such as MoneyHub are very useful), there is still something of a barrier.
A switch to smart speakers does not remove these issues completely but it makes it somewhat easier for people to engage.
I can imagine someone getting up in the morning, hearing the latest pension or retirement scare story on the news, then asking: “Alexa, what’s my pension worth?”
Followed by: “Alexa, what will that give me when I retire?”, “Alexa, how much am I paying into my pension?”, “Alexa, how much should I be paying in?” and “Alexa, increase my contributions from £100 to £200 per month.”
It will take some time to get to this point but it could be the beginning of the writing on the wall for mass market advisers.
This is not necessarily bad news. There is undoubtedly a huge advice and savings gap in the UK and the use of technology to help address it in an affordable and profitable manner is largely to be welcomed.
I acknowledge that most advisers will think they can add value over and above that of a robo or Alexa skill for most people.
And while I agree we should be able to add real value, I doubt we add significant value above and beyond the real costs of that advice for the mass market.
In my experience, those advisers that claim to be offering real value for mass market clients are, in the main, charging too little for their time and expertise.
While it is their right to do so, I do not think this is a sustainable model for the financial services industry as a whole.
Who wants to spend the time and money training to be an adviser and ultimately end up earning less than an equivalent solicitor or accountant (but with much higher risks and much less kudos)?
To be honest, most of our parents would rather say we were a solicitor or accountant than an adviser, with the label still somewhat tainted by the many misselling scandals.
The good news is that there is a clear shortage of advisers. A focus on more affluent clients, where the costs of advice can be significantly outweighed by the value we can add, is surely the future for a sustainable and profitable advice profession.