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5 Trends In Progressive Financial Advice -Blog230

18th September 2023

Paddy Delaney

I was fortunate to attend FutureProof last week, the world’s biggest Wealth Management and Financial Advice conference, attended by c3,000 Financial Advisors. It was held in L.A, California and so was attended mostly by US and Canadian advisors and institutions.

And given US/Canada are probably 15 years ahead of us in progressive advice in clients’ interests, it is a great place to get ideas and inspiration as to how best serve clients here in Ireland.

And this week, you benefit from some of that inspiration; where I share the top 5 trends that I observed from being immersed in FutureProof for 3 days. And as usual, I’ll do this slightly differently; first I’ll share each of the 5 trends as they are generally observed in the market, and then I’ll share the nuances around each as I have observed it.

Today, we’ll delve into the top five trends in financial advice that are currently shaping Ireland’s financial services landscape. So, let’s dive in and explore these trends in a more formal tone.

  1. Sustainable and Responsible Investing

Over recent years there has been a growing emphasis on sustainable and responsible investing in Ireland. In a world grappling with environmental challenges, investors are increasingly encouraged to prioritise Environmental, Social, and Governance (ESG) criteria when making investment decisions.

Most financial advisory firms and indeed the largest stakeholders in the industry have been marketing clients to align their investment portfolios with their ‘values’, focusing on sustainability and social responsibility.

My observations of ESG investing are very mixed overall. There is a lot of obvious greenwashing going on, with lots of high-fee and under-performance. Not a good recipe for investor success.

At FutureProof 2022 there was a lot of talk about ESG investing, with fund managers and advisors talking about building ESG into all client portfolios, how it was the absolute future of investing. However, at FutureProof 2023 there was hardly a mention of it, literally!

When I asked a senior member of the Vanguard team about the demand for ESG solutions they have experienced this year, he confirmed they haven’t seen an awful lot of interest – and the demand has predominantly been in the traditional diversified large cap equity format.

The trend appears to be less about the financial profession creating and selling shiny new ESG products to invest in, and more so around us all actually living and behaving in more environmentally conscious ways.

  1. Digital Transformation

The digitalisation of financial services is another notable trend that has gained traction in recent years, particularly in the wake of Covid. Financial advice is becoming more accessible through digital channels, thanks to both financial technology (FinTech) companies and traditional financial institutions.

These entities offer online platforms and mobile applications, providing advisors and clients with convenient access to financial advice and investment management.

It was said that Robo-advisors, driven by artificial intelligence and machine learning, will emerge as an affordable alternative to traditional human advisors. While the human touch remains crucial in financial advisory services, the trend toward digitalisation is undeniable. It allows a broader audience to access financial advice efficiently and conveniently.

My observations are that Fintech is certainly a large business – there were countless Fintech providers in attendance, with all sorts of bells and whistle software to increase a firm’s productivity and enhance the client experience.

Some of them are overkill, some a waste of money and some are worth every cent of their monthly sub! And the ones that work, can and do help greatly in communicating, serving and aiding clients.

Robo-advisors however, are not the growth area that some advisors feared. I for one am disappointed by this. There is a large cohort of the population that cannot be serviced by independent advisors, are usually under-serviced by the traditional model, but would potentially benefit hugely from Robo-Advisors.

The trend appears that financial advisory firms are profitable and so can afford all sorts of fintech (a lot of which is really expensive!). However, the robo-advisor trend is not where we thought it would be, unfortunately. Artificial Intelligence is the buzzword in financial services at the moment, and this was obvious at FutureProof (AI replaced ESG this year!). The focus is on harnessing AI to deliver value to clients and to improve advisors’ productivity as opposed to trying to turn AI into an investment solution, which I’m all for.

  1. Retirement Planning and Pensions

As Ireland’s population ages and as the prevalence of Defined Benefit schemes declines, retirement planning and pension strategies have assumed increasing importance over recent years. People are living longer, and the cost of living in retirement is on the rise. Financial advisors should be working closely with clients to develop comprehensive retirement plans and secure sustainable retirement income.

The trend in the US is that there are developed and flexible retirement draw-down strategies, with whole departments working on the plans of their clients. However, Ireland is a long way behind.

Of course, we have minimum withdrawal rates of 4%, 5% and 6% on pension retirement pots which can reduce the level of flex one has. But they have something very similar in the US which they call Required Minimum Distributions (RMDs) which don’t kick in until 72, a full 12 years later than here!

US advisors and providers appear much more proactive about developing strategies to enable clients to optimise and maximise their retirement incomes – and this is something we put a lot of work into with clients ourselves – as we see it as something that we all deserve to be able to do when we get to the spending stage of our lives! Read Blog 147 to explore How Does An ARF Work & Retirement Income ‘Guardrails’

  1. Estate Planning and Wealth Transfer

Partly because of the rise of ARFs, the rise of property values and a general growth in affluence, Estate planning is becoming a significant focus in Ireland and elsewhere. Individuals seek efficient methods to transfer their wealth to the next generation without paying any more tax than they need to.

In Ireland, where property and inheritance taxes can be substantial, financial advisors are aiming to assist clients in developing strategies to minimise tax liabilities while ensuring that their assets are distributed according to their wishes.

The trend is usually to try sell these clients an estate planning insurance policy (in return for seriously high commissions) but there is much more to it than that if one is earnestly looking at it. It can require quite expensive legal and tax advice to develop and execute and oversee a plan of action such as a Family Partnership or other such structures.

The trend that I have observed at FutureProof is that there are now legitimate Fintech solutions available that develop these plans and produce the legal structures required! While only currently available in the US and Canada, these systems turn extremely complex tax and legal planning into a user-friendly and transparent experience with fully compliant output. One such piece of kit was, which would cost a firm c€4k per year per licensee, but would enable that firm to deliver huge value to their clients. They have their own in-house legal team who ensure the output is compliant on an ongoing basis, and their team of developers is apparently based in Dublin! Fascinating to see it in action. Some day it may be available here!?

  1. Cryptocurrency

Finally, everyone’s favourite topic, Crypto!

In 2022 there must have been at least a dozen speakers and ‘experts’ talking about crypto investing, and multiple exhibitors selling crypto-related investment and service solutions. Again, I was skeptical of almost every bit of it. This year, there was zero reference to crypto.

The trend here is that crypto as part of financial advisors’ toolkit has passed it seems. Every advisor there that I spoke to wouldn’t touch it, and certainly don’t recommend it to clients. I’m always looking at what we do and how we do it at Informed Decisions, in the interest of serving our clients, and crypto has always been under review. If someone wants to access it, they can do so via our platform. And purely in order to know how it feels to own some, I bought a tiny slice via Grayscale ETF last year – and let me say this, it hasn’t been a great experience!!

In Conclusion

Financial advice in Ireland is slowly evolving to meet the needs of clients in an ever-changing financial landscape. Trends such as sustainable investing, digital transformation, retirement income planning, estate planning, and investment solutions are reshaping the financial advisory industry.

As these trends continue to evolve, financial advisors should continue to play a pivotal role in helping clients navigate the complexities of their financial futures, providing guidance that is not only financially sound but also aligned with their clients’ values and objectives.

We’ll see if I get to go to FutureProof 2024, but I’m sure the trends will shift, some new fad will be the talk of the town – but one thing will remain a constant; that the client should remain at the very core of everything that a financial advisor does and doesn’t do!



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