Paul McNamara, CEO, EValue
An advice gap exists in the UK – and it’s leaving savers stumbling into poor financial decisions, without the right advice. The gap started in the wake of the 2013 retail distribution review (RDR), which resulted in advisers making their charges transparent for consumers – and putting people with low wealth off seeking advice. The gap widened in the wake of the Pension Freedom changes in 2015, which gave individuals more flexibility about taking income from their pension pots – and meant more people need advice and guidance to help guide their decisions.
A pensions advice endemic
Worryingly, this gap is affecting around a third of the UK population: a survey carried out by the Financial Conduct Authority (FCA) last year found that there are 18.2 million people who might have a need for advice, but haven’t yet taken it. Basic financial education is lacking: 34% of workers have a workplace pension but don’t know anything about it, while 79% of adults wished they’d learnt about finances at school. At the same time, the number of organisations offering financial education to employees has fallen from 41% in 2017 to 36% in 2018.
Cost is a major contributor to the pensions gap. High fees deter people from seeking financial advice, while advisers refuse to speak with those that have less than quarter of a million in savings and investments. This is leaving many people abandoned, without knowing where to turn for advice – and this is where technology can play a crucial role.
We’ve seen how sectors like retail and travel have changed the way they engage and serve customers using technology: £1 in every £5 is spent online. Four in five people book their holidays online, rather than in-store or over the phone. These industries now use technology as a core part of doing business and are seeing it transform their customer journeys and supply chains.
Change in financial services is less uniform. The way we make payments is radically different to how it was just five years ago. And the way payments and insurance businesses use technology is leading the charge. But many organisations in planning, long-term savings and investments are yet to embrace new consumer attitudes and advances in technology.
Complex relationships with work, finances and retirement
Although slow, change is happening – and the disparity between payments technology and investment technology is only natural. We have an undeniably more complex relationship with our long-term finances than with everyday transactions. From personal loans to multiple pension pots taken from multiple companies, we’re past the days of having a single final salary pension from one employer.
The state – and many businesses – no longer have a paternalistic attitude towards savings provisions. Instead, they’re willing to give people the access and control to shape their own finances. 2015’s pensions freedoms gave people greater access to their pensions, while the upcoming pensions dashboard project will let people manage their finances, rather than solely relying on their employer or the government. The introduction of auto-enrolment has meant 10 million more people are saving towards their futures too.
People aren’t just being pushed into taking more control. There’s a definite ‘pull’ going on, with more people moving away from businesses and the state for their financial security. Despite the state pension age getting later and life expectancy getting longer, millennials are planning on retiring earlier. Whether it’s following the Financial Independence, Retire Early (FIRE) movement, or saving, investing and working on side projects, their financial lives are increasingly complex.
With these huge changes to income streams, retirement expectations and pensions, people need financial advice and guidance more than ever. And many want more control over their finances and future too. But with basic – and workplace – education lacking, the advice gap has never been greater or more dangerous, particularly for those approaching retirement. If they make the wrong decisions, they potentially risk running out of money in retirement.
New approaches using technology
The combination of rising customer expectations, the growing need for advice and an influx of smart technology is creating a catalyst for much-needed change in the industry. And this is where technology can make a real difference. Application programming interfaces (APIs) can make complex calculations accessible to anyone, while tools and widgets can help improve communications and set expectations for consumers. This includes digital advice and guidance platforms, which give precise customer advice or guidance in an efficient way, while reducing the regulatory risk for the provider.
A platform that combines technology like APIs, tools and a stochastic asset model with third-party technology and automation elements can provide sophisticated and seamless advice. This combination supports end-to-end digital advice and guidance processes – which in turn provides people with the confidence and motivation to make better informed financial decisions around pensions, savings and investing.
What’s more, these platforms can provide up to a 90% reduction in the time it takes for people to get savings and investment advice, without stripping out any parts of the process. That means more customers can be seen, while also receiving better quality time with advising staff. A win-win all around.
I want to see more people receive better advice and, in turn, start making more informed financial decisions to help secure their futures. Technology can only help with this.
AI: CUSTOMER FACING EMPLOYEES’ BEST FRIEND IN THE FINANCIAL SERVICES INDUSTRY
By Ryan Lester, Senior Director, Customer Experience Technologies at LogMeIn
We’ve all heard the old saying “money talks.” Well when it comes to customer loyalty and retention, good customer experience talks much louder, with 30% of customers leaving a brand and never returning due to a bad experience.
The truth is, there are a lot of companies with similar products and services, but that doesn’t mean that differentiation is impossible. So, what’s the solution? For financial services, large and small, customer experience is becoming the key competitive differentiator and the best way to deliver an impactful experience is to empower customer-facing employees to do their best work. Artificial intelligence (AI) is enabling these employees to create remarkably better customer experiences, resulting in customer loyalty, advocacy, and overall growth.
For financial institutions that have been considering new strategies for improving the quality and efficiency of their customer experience, here are a few ways AI can enable them to deliver the “human factor” that good customer experience demands whilst ensuring customer facing employees can provide a more positive experience for customers.
Increase employee productivity
How much of employees’ time is spent searching for answers to questions? Do they ever have to put customers on hold or even step away to get additional help? AI helps provide front-line employees real-time guidance so they can spend less time looking for information and more time solving problems. An AI-powered chatbot, for example, can be listening in the background of a conversation helping point employees to the right data, solutions, and processes to resolve customer issues faster than ever before.
Deliver a consistent customer experience
When banking customers engage with their financial institutions, they measure the speed and accuracy of the service through two criteria. First, how quickly can the system access their account and deliver the correct information? Is it faster than a human could type it in and share it? And second, if they eventually do need to be connected to a live customer support agent, is their information captured and passed along accurately? AI technology takes those general queries off the customer support team’s plate, providing a quick, accurate, and effective response. If a query needs a more in-depth response, AI can hand it off to support staff to address.
Not only this but leveraging a centralised, AI-powered knowledge solution ensures every employee has access to the same, updated information, so no matter who the customer speaks to, they can be assured that employee responses are both consistent and accurate across the board.
Accelerating employee training and onboarding
Like any industry, employee turnover is inevitable and can be costly. But, not training new employees correctly or in a timely manner could be much more costly. When it comes to financial services there is a lot to learn, whether it is something simple like the process for checking an account balance to all the nuances associated with mortgage loans. AI can support on-the-job training by helping new employees answer questions confidently, correctly, and much quicker than they could before.
Improving employee satisfaction
Today’s banking customer has all kinds of new ideas about their banking experience. “The Amazon Effect” has successfully raised consumer expectations to the extent that a consistent, personal, and relevant experience is the new normal. As a customer, how many times have you been told “I’m sorry, I don’t know the answer?” Customers want solutions to their problems and employees want to be able to deliver those solutions as efficiently and effectively as possible. AI assisting in the background helps minimise those negative moments – making employees job easier, less stressful, and overall more enjoyable.
Identify knowledge gaps
Do you know all the questions employees are getting asked? Do you know what’s easily answered and what’s not? Real-time insights allow knowledge managers to keep up to date on frequently asked questions and gaps in current resources. This allows them to strategically improve or add content where needed.
Augmenting customer service
Whether talking with an AI chatbot or a personable customer service team member, the modern banking customer has high expectations for convenience, speed, and security. Which means that the technology you choose to deploy and how you deploy it is now just as important as who you hire and how you train them.
Today’s AI solutions won’t replace customer service agents or get in the way of the human factors that drive the customer experience. On the contrary, they augment it, allowing the business to do more without adding human resources. The higher the quality of a AI chatbot solution, the better it will be at taking the routine requests off the plate of customer service agents—giving them more time to provide a personalized and positive experience for customers.
TIPS TO PROTECT YOUR CASHFLOW DURING THE COVID-19 PANDEMIC
By Rita Cool, Certified Financial Planner at Alexander Forbes Financial Planning Consultants
The full impact of the COVID-19 pandemic is as yet unknown, but individuals have already begun to have their lives disrupted by the country’s economic shutdown, with retrenchments, salary cuts and forced unpaid leave making them take stock of their financial position.
The basic principles of financial planning are especially relevant at this time, but in the short term, cash flow is more important to many people.
To help safeguard you and your family’s financial security, here are some tips to follow to make sure you’re making your money work hard for you:
- Draw up a budget – this is especially relevant if you’re worried about possible retrenchment of yourself or your partner. This will help you know how much you need to cover your basic living expenses and where you can save money. Don’t only look at what you need to spend money on, but also when you think you will need that money. Perhaps you paid school fees upfront at the beginning of the year, or your car registration is only due again next year.
- Check your bank fees. Are you in the best structure for your needs? Are you paying for services that you never use? Consider moving banks to get a better deal.
- Banks have waived the Saswitch fee payable for withdrawing cash at another ATM other than your own bank, but if you’re doing this, be aware of when this switches back as you can end up paying almost double the bank fees.
- Did you know that you start paying interest immediately if you draw cash from a credit card and that you do not get three or six months’ interest free?
- Go through your house while you have extra time and identify potential items which you could sell, as this will free up cash.
- Where possible, pay cash for items as the interest rate on hire purchase items is very high and you pay around 20% more for those items than the sticker price. If you cannot afford the item and you don’t need it right now, wait.
- Look around for bargains online rather than driving around. There are some good sales on, and you can support businesses that need your help.
- At the same time, be aware of spending extra cash you could be saving towards your financial safety net. There are lots of deals available, so balance the need for the 70% off bikini or new laptop with being cautious about the future.
- Use store coupons and discount vouchers. The main food retailers have loyalty programme structures that can be tailored to your specific spending patterns. Make sure you claim point or vouchers but look out for monthly costs to belong to a rewards program. Ask yourself if your monthly savings validate the cost. Optimally a reward scheme shouldn’t cost you money.
- Check with your insurance company if your premium can be reduced because you’re driving less during lockdown.
- Check your current insurances. Do an insurance rebroke. Make sure you are covered for what you need and take things off the list that you do not have any more and add what you have bought since the last update. Make sure you are not under or over insured and that your premium is market related. The cheapest premium isn’t always the best so be aware of exclusions and excesses and make sure you can afford the excess if you need to claim.
- In most cases you can reduce your monthly insurance premiums by not having a cash pay-out in the future. If you want a pay-out, save the extra premium in an investment product, not a risk product.
- Be wary of consolidating debt. You might pay a lower interest rate but it might well be over a longer period so the total interest paid will be higher. If you have debt issues, set up a debt plan with dates and goals to reduce the debt little by little. Do not give up.
- Be aware that payment holidays are not a free loan, you still owe the money and you’re paying interest on it. Check with your service provider.
Remember that the pandemic will pass. Try not to panic as this may lead to rash financial decisions, which could have an impact on your finances later down the line.
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