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Wouldn’t it be great if mass-market consumers could get reliable financial advice through the web?
If I’d said that in 2006 (yup, a whole 10 years after the web took grip) – which I did – I’d have been laughed out the room – which I was. Now, the D2C bandwagon appears nicely full. All of a sudden, simply because adviser charges are a bit clearer, what was a few years ago a daft idea, is all of a sudden the new promised land.
However, as Abraham Okusanya recently highlighted, most direct propositions seem to be a “me too” offering – another platform / supermarket type thing which might offer a few new benefits, but which certainly doesn’t compete with the marketing clout of Hargreaves Landsown et al, and certainly doesn’t meet the abundantly clear need for advice.
Perhaps realising this, manufacturers of such platforms are looking to distribute through advisers (I believe they call it “B2B2C” ). But how many advisers really have the marketing experience and budget to scale such a thing?
Of course, there is the odd exception, with Nutmeg.com being the most notable. They’ve built a web platform that offers clients an automated experience not dissimilar to the one an advisor might take you through (at least for simple investment advice). More importantly, they’ve done a phenomenally impressive job of raising the type of Venture Capital you’d need to begin marketing it – no mean feat for an early stage UK FinTech startup.
Nonetheless, building the brand, understanding and trust required can take 10+ years. Yodlee brought bank account aggregation to the UK in the late ’90s, yet it’s still not taken off like Mint.com has in the US. Will UK VCs have the required patience? I hope they do.
Anyway, faced with this type of competition and challenge, where is the opportunity for IFAs-turned-web-entrepreneurs in this D2C revolution?
Well, what advisers understand, more so than those from a tech or ExO heritage, is that when it comes to financial planning, most people will always want at least some level of expert human guidance.
D2C doesn’t have to mean purely automated. Learnvest.com – a US startup – offers “productised” advice (think Gold / Silver / Bronze with a low monthly price and list of associated bullet-pointed services) from real people – CFPs no less. Sure, they use technology to help (it’s all telephony-based and aided by web-based easy-to-use budgeting platforms), but ultimately it’s real advice from real advisers.
“Yes, but I’m not a US-based Harvard MBA who can raise $25m venture capital” I hear you cry?
Well then, take inspiration from Crunch.co.uk. They’re a UK web and telephony-based accounting service, started by a local accountant teaming up with a web entrepreneur. Between them, they had the necessary skill set. They started small and ultimately brought big investors on board (including the CEO of Skype).
Despite the growing D2C momentum, I believe the medium term outlook for financial advice is strong (hence why we focused VouchedFor.co.uk on it). The D2C market will take time mature, but mature it will. However, when it does, advisers will be an integral part of it. In what way, shape and form remains to be seen.