30th November 2020
As the number of coronavirus cases continue to fall across the UK and the government begins to ease its lockdown measures in earnest, the ability of businesses to adapt to the disruptions and uncertainties raised by the pandemic could prove instrumental in defining their ability to prosper in a post-Covid landscape. There can be little doubt that some fundamental changes are afoot, but what kind of trends can we expect to see in the coming months?
Well, one of the ways in which these changes could impact on the ER sector is in terms of the operational models that businesses pursue and the means by which they interact with their custom-bases, particularly given the reliance that the industry has placed on technology and other remote options during the lockdown period. Few within the industry could have anticipated that the stop-gap measures which were implemented at the start of April would continue beyond the pandemic crisis. Yet, fast forward just a few months and a subtly different viewpoint is beginning to emerge across parts of the sector as the advantages of using remote consultation and day-to-day working processes begin to be better appreciated by businesses and customers alike. For example, a recent More2Life survey of later life financial advisers has discovered that almost 60% of respondents believe that the ER sector will become more reliant on technology in the coming months, with over 70% and 60% of firms reporting an upswing in the use of video conferencing apps and phone conference lines during the lockdown (respectively). Moreover, the research has revealed that the number of brokers using provider portals has also risen during the past three months (by 19%), while the use of social media platforms, such as Facebook and LinkedIn, has grown by 25% and 23% (respectively) as brokers look for new ways to engage with existing clients or to source new contacts. So in short, the technology is there, it’s been shown to work well and it’s making a major difference to the ways in which firms and brokers conduct their business.
Moreover, it’s also raising some interesting questions as to the need for office-based, as opposed to home-based, workforces. For example, research conducted by the business management consultancy firm, Eden McCallum, has revealed that almost 50% of UK companies operating with home-based workforces under the lockdown experienced an increase in productivity (as opposed to 29% who said otherwise), with the absence of long commuter journeys and the flexibility of home working conditions being cited by analysts as a key factor for improved performance levels. By comparison, 51% of the firms surveyed by More2Life indicated that their staff had worked well from home during the lockdown and that these practices would be allowed to continue going forward, while 47% reported that they would be reviewing their internal processes so as to affect a more streamlined approach. In practice, this could mean that businesses will look to reduce their overheads or to maximise profit margins by cutting down on the amount of office space that they rent while also prioritising the impact of happier, better incentivised workforces- an intriguing prospect. However, any process which is conducted on an exclusively remote footing could arguably diminish the subtle nuances associated with one-to-one consultations (such as eye contact and body language), reduce the importance of team culture and increase the potential for fraud, duress or coercion- you just never know who else is in a room during these conference calls. Indeed, the sensitive nature of one-to-one legal advice will almost certainly preclude a purely digital approach to these services going forward. Nevertheless, with greater working flexibility looking likely to play a key role to businesses over the coming months, this is definitely a situation to keep an eye on.
Another way in which post-lockdown conditions must be seen to impact on the ER sector is in terms of the quality of advice which is offered to clients, particularly in light of the woeful (albeit minority) practices that have been highlighted by the recent FCA report into the sector. These include incidences of clients being steered towards unsuitable product choices by advisers who were neglectful of individual circumstances or who had failed to adequately explore the impact of debt consolidation on finances- a serious issue to be sure. In addition, a lack of supporting evidence for offered advice was also raised in some cases. The watchdog has confirmed that ER is continuing to work “well for many customers” and that the majority of clients are achieving “good outcomes”. Moreover, as David Burrowes, the chairman of the ERC has pointed out, the number of complaints received by the Financial Ombudsman Service in relation to ER represented a mere 2% of all home finance product grievances last year, while the combination of regulatory and ERC standards, as well as the presence of independent legal advice, have been repeatedly proven to offer high levels of protection to customers.
Nevertheless, with post-lockdown uncertainties looking likely to impact on levels of consumer confidence, it is imperative for our reputation that the industry should be seen to root-out any evidence of malpractice that could lead to potential harm or which is predicated on cutting corners in order to drive-up business. And, while recent research by Key Partnerships has revealed an upturn in the number of brokers prioritising vulnerability work over the lockdown period (with 26% treating all clients as potentially vulnerable and 13% increasing monitoring to ensure better customer support), these figures need to be much higher if we are to ensure that standards of advice are improved and that clients are properly supported.
I am confident that the industry is in a good place to meet the needs and circumstances of our clients safely and responsibly and that the vast majority of advisers are diligent, but this is one of those areas where we simply cannot afford to compromise. Let’s get to it!
