It took two years of sacrificed weekends and holidays to complete, but on 1 November 2017 Catching the FinTech Wave – the first book by Dynamic Planner CEO Ben Goss – was published following a great launch night in London. Here, the financial services pioneer reveals what motivated him to write the work, what he hopes audiences will take from it and also reflects on both an enormously successful career to date and how he forecasts the future for online financial advice.
Q. What is your book Catching the FinTech Wave about?
Catching the FinTech Wave is all about how financial services can embrace and really start to understand and utilise technology to transform their firms – whether that is significantly increasing their productivity, improving their efficiency, de-risking the firm’s compliance risk or fundamentally enhancing their services, so clients are delighted to pay fees to access them. Those four areas represent the big opportunities that technology brings to the sector in many shapes.
It is very much a how-to book. There is already lots written on how technology might revolutionise industries over the next few decades, but a lot less written which practically informs financial advice firms. How do they take technology and increase their productivity or improve their client proposition?
I really wanted to take what I have learnt with the Dynamic Planner team over the last 20 years, alongside a lot of invaluable input from clients and partners, and put together a relatively simple read, but one in which distils best practice on how firms can take technology and transform their business.
Q. What motivated you to write the book?
The how-to aspect of the book was absolutely the motivation behind writing it. Technology is on the agenda of every boardroom currently in the financial service sector, whether they are a local, regional or national firm, or a bank or wealth manager. That is because there are lots of potential opportunities out there right now but also challenges.
If you are not running a financial service which has FinTech at its heart today, you will already face real challenges concerning suitability, productivity, around profitability and ultimately face an inability to access the next generation of clients. Many practices, particularly post-RDR (retail distribution review), are focused on the mass affluent, baby boomers aged between 55 and 75.
A lot of our clients at Dynamic Planner have voiced a concern that they need to reach the next generation before this current generation passes. How do they do that? Catching the FinTech Wave looks at and addresses these key common questions: how do firms run a compliant business in the 21st century; and how do firms access clients with smaller amounts of money today but who represent the clients of the future?
Catching the FinTech Wave describes ‘five big challenges’ facing financial service firms when they adopt FinTech. What are they?
- Prioritising what’s important in a complex, regulated business in which the voice of the customer can often be lost
- Engaging customers using technology when levels of financial capability are often low and levels of financial inertia high
- Bringing advisers with you and overcoming a natural reluctance to embrace FinTech, and helping them understand the benefits of FinTech in their roles and relationships.
- Managing systemic risk when codifying financial advice and planning, be that in risk profiling as part of an investment process or in fully automated robo-advice.
- Overcoming legacy systems’ architecture and systems which either try and ‘boil the ocean’ or sit in ‘splendid isolation’.
Q. What are the dangers for an organisation in the sector which is slow to embrace FinTech?
Firms which have been slow to embrace FinTech generate a whole series of challenges of itself. The Financial Conduct Authority has said quite publicly that it doesn’t understand how firms can ensure compliance, ensure suitability, ensure customers receive value for money and do so sustainably without using technology.
The FCA is interested in the sustainability of any financial business model today, so the idea that you can deliver the value that clients but without using technology has a big question mark hanging over it.
Q. You founded your first company in financial services, Sort back in 1998. How have you seen the sector evolve over the last two decades?
In the mid-1990s, when the internet 1.0 as it was then called was taking off, I was a Strategy Consultant for one of the big four management consultancies specialising in financial services. It was very clear to me at the time that the Internet could change everything for financial services, so I left and with two co-founders set up Sort, the UK’s first online advice business, which today would be called a robo-adviser. It was very successful and we were advising more than 1,000 people a day before we sold it to a US firm, which did the same thing but on a larger scale. When we looked at the market in the late-1990s, we felt that consumers would move quite rapidly to a position where they were taking advice and managing their finances online. But we were wrong.
What we failed to understand back then was the level of consumer inertia around financial services and why 80 per cent of investments are still made through financial advisers. There is a very good reason for that and that is because financial advisers are absolutely fundamental to consumers making good investment decisions and overcoming consumers’ inertia, lack of financial capability and general mistrust of financial services.
I think in truth we underestimated the weight of real and perceived regulatory risk. If I cast my mind back to the early 2000s, there was a lot of interest in the use of technology in the advice process, but at the time a lot of organisations thought there wasn’t the regulatory framework in place to properly support it. Today, we are in a very different position and firms can access a lot of support from the Regulator designed to help them bring innovative or automated advice models to market. That position is now having a very positive impact on the speed with which firms are adopting technology, as well as the nature of services they are looking to provide.
Q. When you reflect on your career to date, what are you most proud of?
I am most proud of the position of trust Dynamic Planner today enjoys with so many thousands of financial advice firms. I am proud of the way in which we have worked with those firms to create an investment process which accurately – and in a much more scientific manner than previous models – assesses the risk clients are willing and able to take and then translates that into a financial plan and portfolio which reflects that risk. At Dynamic Planner, we have a process which is used 2,000 times a day by advisers to help ensure investment suitability and ultimately to help customers achieve the things in life which matter to them most. They really are the fundamentals of good financial planning – and I am very proud of that.
Q. How do you see the future for FinTech?
I think in the future FinTech will play a much more central role in the provision of financial advice by firms. Today, its use is growing so rapidly, particularly now that the regulator is supporting its adoption throughout practices. It started with risk profiling five or six years ago and it has now evolved into end-to-end investment processes.
In the future, we will see much greater adoption of FinTech and see firms using that technology to increase access to the advice they give; to serve clients they previously might have struggled to serve profitably; and, as a result, what I believe we will ultimately see is a thriving advice sector where advisers, paraplanners and administrators are all using technology in a joined-up fashion – in a way that enables clients to achieve their goals, to stand the best chance of achieving those goals, to understand the level of risk they are taking and so firms in the sector are operating even more profitably and productively than they are today.