Efficiency key to making risk advice more financially viable for holistic advisers

In an upcoming episode of The ifa Show, Risk Hub founder Marc Fabris suggested that the industry needs to focus on building efficiencies in the risk advice process to make it more appealing for the wider advice profession to engage in this sector.

According to Fabris, currently there are around 1,000 financial advisers writing three quarters of risk business, while around 5,000 are “part-timers” doing some level of risk work but focusing primarily on holistic advice.

Even though there are still 10,000 advisers unaccounted for, Fabris suggested that the focus should be on making it easier for the “part-timers” to provide more risk advice and take some of the load off risk specialists, many of whom are “bursting at the seams”.

Based on past research, Fabris said that financial advisers can spend between eight and 14 hours for a risk advice process before they even have to deal with underwriting.

“That is way too long. So, that needs to be compressed to make it more viable,” he said.

“The bottom line is at the moment there is too much inefficiency in people's delivery of risk.”

In order to make risk advice more commercially viable for firms that currently lack the in-house skills, Fabris suggested that outsourcing skills and AI adoption could be the solution.

“We've seen massive growth in outsourcing over the last few years. It's not just offshoring either. There's a lot of onshore support groups around paraplanning. You've got a number that are specialised and support that risk paraplanning,” he said.

“So, you might go, ‘well, hey, I want to conduct this process but I just don't have all of the skills internally’. There are ways to deal with that and that way you can scale without having to expand staff dramatically. There's some options there.

“There's certainly tools that can be used and systems in the process. Obviously AI has been a topic of, I'd say topic of the day, but topic of the last two years and it’s just getting bigger by the minute.”

Fabris added: “If you're not getting your hands dirty, getting familiar with these tools and systems, then I think you're getting behind.”

While the industry is experimenting with how to best utilise AI in the advice process, Fabris said the most obvious starting point for boosting efficiency is file notes.

“If I can cut out 30 or 45 minutes in doing my file noting after a client meeting and help make sure I don't miss stuff and help streamline the next steps, streamline the process for my paraplanner so that they're not trying to understand my scribble, you're in a better position,” he said.

However, Fabris also stressed that advisers need be careful that they’re not just “jumping at shiny objects” when it comes to adopting new technologies, but taking on tools they can leverage without having to overhaul too many of their processes, ultimately creating disruption in the business.

“Whether it's tech or people or process, a combination of those can help,” he said.