Latest / Financial Planner Life Podcast / The Broken Financial Advice Process: Who’s to Blame? | Derek Smith, Aberdeen Adviser

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The Broken Financial Advice Process: Who’s to Blame? | Derek Smith, Aberdeen Adviser · Financial Planner Life Podcast

• 0:04
  Sam Oakes: And today I'm joined by Derek Smith, he's a chief product and technology officer at Aberdeen Adviser.
• 0:10
  Sam Oakes: Derek has worked at major financial institutions, startups, and tech companies.
• 0:14
  Sam Oakes: We're going to talk about where firms are losing time, why the advice process is still so fragmented, what AI genuinely changes, and what a financial planning firm built from scratch today might actually look like.
• 0:27
  Sam Oakes: You're gonna love this episode. So, Derek, I'm gonna get straight into it.
• 0:31
  Sam Oakes: Okay, I'm gonna ask you a question about platforms. Have they become too complicated?
• 0:37
  Derek Smith: Yeah, I think the industry on all sides has fallen in love with product breadth and price.
• 0:42
  Derek Smith: And that has led to just more and more complexity in platforms.
• 0:46
  Derek Smith: But if you look at consumer tech overall, the market has moved in the last 20 years around efficiency, experience, and integrations.
• 0:53
  Derek Smith: And we're starting to see that complexity of that platform breadth has been done without thinking enough about that experience and integration, and it's driven friction across the market.
• 1:05
  Sam Oakes: A lot of people talk about too many bells and whistles as well on a platform. Would you agree?
• 1:09
  Derek Smith: Yeah, definitely. Yeah.
• 1:10
  Derek Smith: So if you cannot use something easily, then it is not useful no matter how much breadth and depth it has.
• 1:17
  Sam Oakes: Would you say that technology's been added without improving the advice process for financial planners?
• 1:22
  Sam Oakes: Do you feel like you know tech upon tech upon tech and the advice process itself is stayed stagnant?
• 1:28
  Derek Smith: Yeah.
• 1:28
  Derek Smith: So if you look at the last 15-20 years, there's been a breadth and plethora of new advice tech software added, but at the behest of not pure integration.
• 1:38
  Derek Smith: So if we look at across CRMs, back office, now AI tech, cash flow modellers, there's been more and more added, but the actual advice process and the simplicity of it has not driven benefits for the advice firm or for the end investor.
• 1:54
  Derek Smith: So we talk about three sevens.
• 1:56
  Derek Smith: On average, firms, financial advice firms use seven pieces of software during their advice process.
• 2:02
  Derek Smith: It takes seven hours on average to key that process out with the actual discussion with the end investor, and they re-key data up to seven times.
• 2:12
  Derek Smith: So each piece of software has been added has not solved that problem.
• 2:17
  Sam Oakes: Yeah, that's crazy when you think about it. It's a huge amount of tech.
• 2:20
  Sam Oakes: Someone's making a serious amount of money out of that technology, saying it's going to change and revolutionise the way you do it, but it's had zero impact.
• 2:27
  Sam Oakes: Yep. Yep. That's scary stuff.
• 2:28
  Sam Oakes: Well, Derek, just before we get into this, tell us a little bit about who you are, your background, and why you're here today.
• 2:34
  Derek Smith: So I'm the chief product and technology officer at Aberdeen.
• 2:37
  Derek Smith: So I'm accountable for how we build products, services, and platforms for financial advice firms in the UK.
• 2:44
  Derek Smith: My background, I've always worked in product and technology, mainly in big FS companies, so across investment banking, trading, and financial advice.
• 2:54
  Derek Smith: But I've also done some routes outside of that in startups and even in a fashion tech company at different points in my life as well.
• 3:02
  Derek Smith: So I've got that experience from consumer tech startup right up to big tech companies.
• 3:08
  Derek Smith: And where I've found my career over the last 10 years looking at the wealth and the really the B2B space in financial advice, I see the software and the services that we offer to clients about 20 years out of date compared to if you pick up your phone and use Netflix or even modern retail banks like Starling, Monzo, Revolut.
• 3:29
  Derek Smith: And I want to help lean in to try and solve some of those problems to make it as simple and easy to access financial planning as it is to choose your next bingeable series on Netflix.
• 3:41
  Derek Smith: Gotcha. Wow, I love that.
• 3:43
  Sam Oakes: Fantastic. Um B2B, can you just elaborate on that a little bit?
• 3:49
  Sam Oakes: Because I've not had anybody really on the podcast that's talking mainly about B2B within financial planning, and I think that's a huge space.
• 4:04
  Sam Oakes: Yeah.
• 4:05
  Derek Smith: So yes, we need to think about the end investor, but our job is to try and make it as easy as possible for financial advisers to serve their clients.
• 4:13
  Derek Smith: And we need to think about that. So that's where the B2B side is.
• 4:17
  Derek Smith: We need to understand how firms work, how they give advice, where their friction points are.
• 4:22
  Derek Smith: And our software, our products, our service needs to be designed around that.
• 4:27
  Sam Oakes: Brilliant. So what are you doing then at Aberdeen?
• 4:29
  Sam Oakes: So they've brought you into Aberdeen, you've you've joined them. What are you doing?
• 4:32
  Sam Oakes: What's your main focus yourself?
• 4:33
  Sam Oakes: And also how are you interacting with those financial planning companies to understand how to improve their businesses?
• 4:39
  Derek Smith: So I joined 18 months ago.
• 4:40
  Derek Smith: Our the key purpose for me joining was to build digital product development as the DNA of how we run our company.
• 4:47
  Derek Smith: And we didn't have that before, right?
• 4:50
  Derek Smith: We had people who had knowledge of that, but we were mainly working with partners to build our software.
• 4:56
  Derek Smith: Now, one of the challenges with that, if you don't have digital as part of your DNA now, you cannot build those products and services that your customers need.
• 5:06
  Derek Smith: So we've been we've hired about another 70 to 80 people into our product and technology company, and that is all to drive those digital skills in data, AI, software engineering, customer and product design.
• 5:19
  Derek Smith: And then how have we done that? We've hired from different industries.
• 5:23
  Derek Smith: We have experts in financial services, but we've hired from consumer tech, health, and from gaming for people who know how to build products and services that we use and touch globally.
• 5:35
  Derek Smith: So people who've built motor platforms like Cinch, holiday platforms like On the Beach to really transform that digital DNA of how we build services for financial advice.
• 5:45
  Derek Smith: And then some of the things we've done around that.
• 5:48
  Derek Smith: So once you've got the people, how do you build those skills?
• 5:52
  Derek Smith: We've worked with the Silicon Valley Product Group, with Teresa Torres, who wrote a book called Continuous Discovery.
• 5:59
  Derek Smith: And that's all around how you work hand in glove with your customers to understand their problems.
• 6:05
  Derek Smith: So an example of that would be our pro our teams are set up around either products customers use or journeys they use day-to-day, like onboarding or servicing a client.
• 6:16
  Derek Smith: And each of those teams, we train them to be out with financial advice firms every week.
• 6:21
  Derek Smith: So they need to be looking at how do you give advice, how do you service clients?
• 6:26
  Derek Smith: And it's not just about what we teach them, it's not about the product that we offer on its own.
• 6:32
  Derek Smith: It's understanding the whole jobs to be done for those firms. How do they give advice?
• 6:38
  Derek Smith: When do they engage with clients?
• 6:40
  Derek Smith: Where is their friction across that journey end-to-end, not just the point that we're involved in to try and reimagine those journeys and services?
• 6:49
  Derek Smith: They're all the foundation blocks.
• 6:51
  Derek Smith: What we are then doing over that last 18 months is that 70% plus now of the digital products, services, data products that we build for clients are built in-house end-to-end.
• 7:02
  Derek Smith: So we've built that DNA in, we're now doing that continuous discovery with firms day-to-day, and we've set that up around pillars that drive value for firms.
• 7:12
  Derek Smith: So that's around efficiency, experience, and integrations.
• 7:15
  Derek Smith: There is room for innovation, but we want to say that of how do we evidence that we can give time back to our firms?
• 7:22
  Derek Smith: And one of the quantifiable metrics we look at is how can we demonstrate that we've saved a million minutes of time for financial advisers and their firms through the automation of service journeys, integrations, and processes that talk about those three sevens we mentioned earlier to give that time back to firms.
• 7:42
  Derek Smith: I love that. So a million minutes. Minutes. Where did that figure come from?
• 7:47
  Derek Smith: So it came from we have 350,000 calls.
• 7:49
  Derek Smith: So we have 80 billion of assets, two and a half thousand active firms using our platform, and tens of thousands of users.
• 7:57
  Derek Smith: We have 350,000 calls per year, and we think 70% of those calls are caused due to friction in the advice process.
• 8:04
  Derek Smith: So we're aiming to do is digitize all 70% of them. Either that it's STP, so sorry, straight through processing.
• 8:11
  Derek Smith: So if someone wants to do a process, they can do it with one click of a button within the platform within within our digital experience, yeah, or they never have to do it.
• 8:21
  Derek Smith: So things like looking at where workflow is across multiple parties, like a transfer, that you can visibly see how where that process is, and you don't actually even need to do the service.
• 8:33
  Derek Smith: So we're providing that back to them.
• 8:35
  Derek Smith: So it's trying to move platforms from a system of record that you go just to do a specific job to, to a system of intelligence that helps you run your platform.
• 8:45
  Derek Smith: Now, we're not we're not saying that we're perfect at that yet, but that's our aspiration.
• 8:51
  Derek Smith: So evidence of efficiency, the experience, and then start to build that system of intelligence through innovation to really drive growth for the firm, not just efficiency.
• 9:02
  Sam Oakes: Love it. All sounds absolutely brilliant.
• 9:04
  Sam Oakes: I love the fact that you're leaning into the travel industry, gaming industry as well.
• 9:08
  Sam Oakes: Just gaming being like gamification or gaming as in gambling?
• 9:12
  Derek Smith: Gamification.
• 9:12
  Derek Smith: So more again, if you look at how do you experience and use a product, we've got to consider in financial advice.
• 9:19
  Derek Smith: So when I was in retail banking, for example, if you think of 20 years ago, you didn't look at your phone every day to look at your transactions, your payments.
• 9:27
  Derek Smith: Now that's a normal thing you do.
• 9:29
  Derek Smith: And actually, we when we were first looking at how do you engage to teach someone about their um their finances, make sure they're not in their overdraft.
• 9:38
  Derek Smith: Actually, with a retail bank, you do want to use that every day, right?
• 9:42
  Derek Smith: Because you, if you think of you will log on to your bank at least once a day, whether that's look at a balance, make a payment, see what's come up, and you'll get notifications.
• 9:52
  Derek Smith: In financial advice, you don't always want someone looking at their investments day to day because that could drive fear, it could drive concern and vulnerability.
• 10:01
  Derek Smith: So you want to learn from gamification that helps you engage when you need that.
• 10:05
  Derek Smith: But how you do that in this industry still needs to be designed.
• 10:09
  Derek Smith: So we want to learn from best practice around how and when you engage someone based on their need, based on their desire, based on changes in their life.
• 10:18
  Derek Smith: And we can learn from gaming, from retail banking, but actually how you best do that when you engage is still to be designed.
• 10:25
  Sam Oakes: I love it. And so that's like a user experience that you're getting stuck into.
• 10:29
  Sam Oakes: I want to get back to this time saving. Okay. So let's get into detail.
• 10:33
  Sam Oakes: What what where are firms wasting huge amounts of time? We talked about a million, a million minutes.
• 10:39
  Sam Oakes: Where are they wasting that time at the moment?
• 10:42
  Sam Oakes: And where is the most obvious space that you are making improvements to give that time back to them?
• 10:48
  Derek Smith: So I would say lots of the processes within a financial advice journey hit multiple parties.
• 10:53
  Derek Smith: And the advice firms that we work with, the the friction and pain that they have is often trying to find out, and this sounds simple, but where requests are.
• 11:04
  Derek Smith: So say if you're making a transfer in, is it with the platform the money's leaving?
• 11:09
  Derek Smith: Is it with the platform who's doing it, who's doing that job?
• 11:13
  Derek Smith: So it's almost trying to see end-to-end processes that they that are they're almost blind to and trying to chase where that is to push it along that workflow.
• 11:23
  Derek Smith: So what we're trying to do is redesign those processes from scratch.
• 11:28
  Derek Smith: So I think again, what we feel with some of our firms are where they've tried to automate, they're trying to automate poor processes from providers.
• 11:37
  Derek Smith: What we're trying to do is redesign those processes from scratch. Tell us how you do that then. Yeah.
• 11:44
  Derek Smith: So an example would be instead of asking someone, this is a simple one, instead of asking a firm to fill in the details about an adviser, so their name, their address, their permissions, we will link to an API, a connection into the FCA register.
• 12:00
  Derek Smith: If you can put the adviser's number in, we can pull back every other data.
• 12:05
  Derek Smith: So it's that type of thing of where it may be a 10 to 20 page form, how do you remove all the friction from that to just positively ask the person to input where it makes a difference?
• 12:17
  Sam Oakes: How much responsibility for improving processes actually sits with a platform and how much responsibility sits with the advice firm?
• 12:25
  Derek Smith: I think it's got to be two ways, right?
• 12:27
  Derek Smith: So if you look at the an advice process or a servicing process end-to-end, it is the firm who's accountable for their client and providing that service.
• 12:36
  Derek Smith: We as providers, whether it's a platform or an advice tech solution, you are part of that journey, but you don't own the end-to-end journey.
• 12:45
  Derek Smith: So I think where our accountability would lie is making the part that we are part of as smooth as possible.
• 12:51
  Derek Smith: And then where the industry hasn't been good at, I think it's definitely better the last few years, is being more open to work with partners across that value chain.
• 13:01
  Derek Smith: So an example would be we're working with Intelliflo, who are the biggest CRM for users just in the financial advice industry, and over 50% of our clients use Intelliflo.
• 13:11
  Derek Smith: When at the moment, when we talked about that seven, seven times rekeying, we've built uh again APIs with Intelliflo and a company of FinTech called ZeroKey.
• 13:21
  Derek Smith: So that if you're setting up a new client and you use the CRM, because that's your back office you're using day-to-day to run your firm, you can create a client with one click onto our platform and you don't re-key anything.
• 13:35
  Derek Smith: You can do two-way doc sharing.
• 13:36
  Derek Smith: So if the client is filling in documents, if you're uploading documents either in your CRM or the platform, there's a two-way connection that you can share both ways.
• 13:47
  Derek Smith: So simple, but that starts to remove that friction.
• 13:50
  Derek Smith: And then in quarter, we'll be going live with quote and with apply.
• 13:54
  Derek Smith: So your whole new business journey you can do either in your CRM or in the platform, and the data share two-way.
• 14:01
  Derek Smith: And we're starting to build that out with more CRMs and more advice tech companies to try and reduce that friction.
• 14:08
  Sam Oakes: Love it. So these CRMs then, you know, out there at the moment, there are quite a few.
• 14:11
  Sam Oakes: You mentioned Intelliflo.
• 14:12
  Sam Oakes: Is there any out there in the in the world that you think are doing a really great job? Any new contenders?
• 14:17
  Sam Oakes: Any that you work with that are really easy to work with?
• 14:20
  Derek Smith: So we work with all the main CRM providers.
• 14:22
  Derek Smith: And I think so, again, I would say definitely the work we've done with Intelliflo and ZeroKey has been hopefully really transformational.
• 14:30
  Derek Smith: It sounds simple, but it just starts to reduce that friction.
• 14:34
  Derek Smith: But we're also in discussions with some of the new players coming to market, like Ningi and with Advisory AI.
• 14:40
  Derek Smith: Some of those are CRMs, some of them sitting in AI tech and suitability note-taking.
• 14:45
  Derek Smith: So they're not all in that space, but we like what they are trying to do to really change that piece.
• 14:51
  Derek Smith: So they are one of the big problems of those data points is not just getting each bit to connect.
• 14:56
  Derek Smith: What we like with some of those companies, it's it's really sitting at a surface level where through modern AI, through modern data techniques, they can access any data point across their platforms or their software they use.
• 15:10
  Sam Oakes: So we like what some of them are doing. Love it.
• 15:12
  Sam Oakes: So all the product providers and service providers that you know, the administrator, paraplanner, financial adviser, if they're not lucky to have that support, who spend stupid amounts of time on the telephone.
• 15:22
  Sam Oakes: I used to work for Aviva.
• 15:24
  Sam Oakes: So we used to take a lot of calls from IFAs, they'd get very high rates about the time it took for the information to get to them.
• 15:30
  Sam Oakes: This is the type of thing that you're looking to solve here. Yep.
• 15:33
  Sam Oakes: With the platform linking in with all the product providers using ZeroKey. Yep. Yeah.
• 15:38
  Sam Oakes: And then combining that with the CRM, which helps speed up the whole process.
• 15:42
  Derek Smith: Yeah. So we've opened up, so say we built 200 APIs with FNZ last year onto our platform.
• 15:47
  Derek Smith: That essentially means that you've got data connections that you can access to do any of the journeys on the platform.
• 15:53
  Derek Smith: That could be open an account, it could be pay money.
• 15:56
  Derek Smith: And what we're then looking to do is where can we remove friction in processes by making connections to allow the advice firm to operate with us how they want?
• 16:06
  Derek Smith: That could be through an AI platform, it could be through an advice tech solution, it could be through a cash flow modeler.
• 16:13
  Derek Smith: And that's where we're trying to work with people like ZeroKey, Origo, some of the kind of middleware layers that will open those connections up.
• 16:21
  Derek Smith: And it's all about that, yeah, speed, efficiency, and allowing the firm to operate how they want.
• 16:26
  Derek Smith: If they want to key directly on the platform, they can. If they want to integrate with their CRM, they can.
• 16:33
  Derek Smith: Now, I would say that this year's been where we've started to launch those connections.
• 16:38
  Derek Smith: So we're kind of on a journey to do that.
• 16:40
  Derek Smith: The reason we want to work with people like Origo and ZeroKey is then different advice tech or platform providers can can connect more than just to us across those services.
• 16:50
  Derek Smith: So it's not just a single point integration, it allows them hopefully to build more efficiency across wider journeys.
• 16:57
  Derek Smith: Perfect. That sounds really good.
• 16:59
  Sam Oakes: Advisory AI spoke a lot about ZeroKey when they came on the podcast.
• 17:02
  Sam Oakes: It sounded, you know, it sounded pretty revolutionary to be fair. Yeah. Yeah. Um that sounds really good.
• 17:06
  Sam Oakes: AI then. Let's just quickly look at AI.
• 17:08
  Sam Oakes: You must have a good opinion or a good view of AI in financial planning.
• 17:11
  Sam Oakes: What do you think is working from your perspective?
• 17:14
  Sam Oakes: And what do you think isn't it and is there any uh anybody out there, any any players that you think are really standing out?
• 17:20
  Derek Smith: So I think the ones, sorry, sorry to go back, but the ones I mentioned on Saturn, Advisory AI, and Ningi are the ones that I've been most impressed with what they've done.
• 17:30
  Derek Smith: Yeah.
• 17:31
  Derek Smith: Um, I think that piece of when it when it started to come in, so on average, there's about 53% of advisers in the current kind of views that are actively using AI as part of the advice process.
• 17:43
  Derek Smith: Now, some of that's record keeping, note-taking. I think we're starting to see people go below that.
• 17:49
  Derek Smith: So I think that's a kind of early use case, which is good, and it's quite safe to test out.
• 17:55
  Derek Smith: Now we want to get into how do you really drive down that efficiency and engagement?
• 18:00
  Derek Smith: How do you move advice from being an annual engagement to an always-on relationship where that advice, guidance, support is always there as you go through your life?
• 18:10
  Derek Smith: Right.
• 18:10
  Derek Smith: So that piece of if there's a change in your financial position, if there's something happens with your family, how is that advice process always there to engage with the client when they need it, not a periodic review?
• 18:24
  Derek Smith: I think that's where we say AI, data and analytics starting to really help with that.
• 18:30
  Sam Oakes: In that 18 months that you've been there, tell us about some of the impact you've had so far at Aberdeen.
• 18:34
  Sam Oakes: I'm gonna say it, I I did ask a few people about what they thought of the platform. Yeah.
• 18:38
  Sam Oakes: And a few people um had a bit of a negative opinion on it. I just wanted to share that.
• 18:42
  Sam Oakes: I thought it was best to be honest. Yeah. But they did have a bit of a negative opinion on it.
• 18:46
  Sam Oakes: But what have why why might that be?
• 18:48
  Sam Oakes: And also, what have you done in your last 18 months to make some really good improvements?
• 18:52
  Derek Smith: Yeah. So I think we I think we need to face into that.
• 18:55
  Derek Smith: So there's definitely a credibility, there's a presence in the market which we need to build back out.
• 19:01
  Derek Smith: We had a challenge and a platform upgrade that we've had um that's caused challenges for our clients.
• 19:07
  Derek Smith: That's three years ago. So we have fixed those issues.
• 19:10
  Derek Smith: We've what we've tried to do over the last 18 months is rebuild credibility through delivery.
• 19:16
  Derek Smith: And I know that sounds simple, but that's where we haven't gone out strongly to talk about that in the market yet because we wanted to build the credibility back with our clients first, clients now to then build the proof points, the evidence, and the support to build back out our brand, our engagement through real through reality.
• 19:36
  Derek Smith: So when we built our new pension in the market, it has the widest price lock.
• 19:41
  Derek Smith: And the price lock is a positive thing.
• 19:43
  Derek Smith: What it means is that you lock in the lowest price you get for your assets at the whole time in the market.
• 19:50
  Derek Smith: So when you've got the most assets, you get the lowest price.
• 19:54
  Derek Smith: We lock in your lowest price at that point through all through your retirement as you're taking money out, you've locked in the lowest price you ever get.
• 20:03
  Derek Smith: And we do that across all of your accounts, and you can lend it into your family linking as well.
• 20:09
  Derek Smith: So we've done a digitized reimagined what a pension should be.
• 20:13
  Derek Smith: We've got the broadest payments and income flexibility, and we've launched that price lock.
• 20:18
  Derek Smith: That was something that we put into market 10 months ago.
• 20:22
  Derek Smith: And then this year, as we've been building out the teams I mentioned and the experience to augment so the skills and digital experience that we've bought in from the market, as well as our financial advice knowledge, we've been looking at integrations, efficiency, and service.
• 20:39
  Derek Smith: So where we've we've, when I talked about how do you make that a million minutes tangible, we've looked at the top 12 processes that drive that 70% of demand in the calls.
• 20:49
  Derek Smith: And we're going to digitize all of them, fully redesign the processes.
• 20:53
  Derek Smith: And that is all evidencing that we can show that by December we're saving 80,000 to 100,000 minutes per month of adviser time.
• 21:01
  Derek Smith: And it's through redesigning those processes from scratch.
• 21:04
  Derek Smith: So that's where we're saying if you're setting up a new firm that same day that links the FCA register, and it's all about how do we take data and integrations to redesign those processes to try and remove as much friction from that process as possible.
• 21:20
  Derek Smith: And that's through a single interaction, like setting up a new firm, changing an adviser through to transferring books to us.
• 21:27
  Derek Smith: So another fintech we're working with called Woven.
• 21:31
  Derek Smith: We've set up a model with them where if you want to move a book, if a firm is moving a book to us from uh multiple clients, they can use Woven to assess their book to look at the assets, to look at the platform charts to say is it cheaper?
• 21:45
  Derek Smith: Can they move the assets quickly? And it segments that data book for them.
• 21:50
  Derek Smith: They can then choose which clients to move, and we've built a bulk onboarding tool that automates how all of those clients are populated onto the platform.
• 21:59
  Derek Smith: So, and that's then removing.
• 22:01
  Derek Smith: All that friction from single points of experience through to moving hundreds of clients in a single process.
• 22:08
  Sam Oakes: Brilliant. Well, that kind of leads us in then.
• 22:10
  Sam Oakes: Let's look inside the average financial planning business today.
• 22:12
  Sam Oakes: So, where is technology still making life harder?
• 22:15
  Derek Smith: So I would say that it's in how do you the cost to serve end-to-end for a firm with a client.
• 22:20
  Derek Smith: So on average, it costs 1,500 to £2,500 for a firm to serve as a client, their end-to-end cost base.
• 22:26
  Derek Smith: Now that's through different types of technology, it's through data problems we've talked about, it's through how do you engage with a client to understand their needs.
• 22:37
  Derek Smith: That's where the friction is across that process.
• 22:40
  Derek Smith: If you look at that cost, that means that that plus regulation is pricing people out of getting advice when they most need it, when they're starting to understand their finances, they're growing their assets.
• 22:52
  Derek Smith: So typically the advice gap. Exactly. And that's got worse.
• 22:56
  Derek Smith: So five years ago, on average, per adviser in the UK, they served 120 to 125 clients. That's now 100.
• 23:02
  Derek Smith: There is not new money coming into this business as well. It's not improving, is it? No, exactly.
• 23:08
  Derek Smith: So that's something as an industry we need to face into.
• 23:11
  Derek Smith: So often we find that when we're looking at firms, it might be 250,000 of assets before they would find it cost efficient to service the client.
• 23:20
  Derek Smith: So as an industry, we need to face into that. That isn't good enough.
• 23:25
  Derek Smith: And especially as we see more and more people go to use D2C platforms, we need to be able to show the value of financial planning to new generations and to people with lower assets who can access that in an affordable way.
• 23:38
  Derek Smith: And I think that's the thing that isn't for an advice business to solve that on their own.
• 23:44
  Derek Smith: That's for us as an industry to face into. Does Aberdeen care about that? Do you care about that advice gap?
• 23:50
  Derek Smith: Yeah. Yeah. So we will put in our mission around how do we open up the world of advice?
• 23:56
  Derek Smith: Now, again, that is a grand statement. We only do that through some of the bits I'm talking about.
• 24:02
  Derek Smith: That efficiency, integration, and then driving in some of the innovation into the market that starts to open up new ways to engage with clients at a cheaper way.
• 24:11
  Derek Smith: And you need to change the operating model of companies to be able to do that.
• 24:16
  Derek Smith: And we've got that in as part of our mission to do it.
• 24:20
  Sam Oakes: Hi, sorry for interrupting this episode, but I just wanted to let you know that it's sponsored by Redmill Advance.
• 24:27
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• 25:03
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• 25:05
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• 25:16
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• 25:22
  Sam Oakes: When do you think time wise then, timescale wise, when do you think you all have that suss?
• 25:28
  Derek Smith: That's a big one.
• 25:29
  Derek Smith: Yeah, like I don't think you ever have that sussed, but I think we do that by if we can evidence we can drive down the cost to serve for our clients.
• 25:38
  Derek Smith: So for firms, that's one part of it.
• 25:40
  Derek Smith: If we can then drive an innovation that supports them in how do you drive in an annual process to an always-on engagement advice model, then we can drive the innovation.
• 25:50
  Derek Smith: So I think you drive cost down to serve.
• 25:53
  Derek Smith: That means you give capacity back to firms, which they then choose how to use.
• 25:57
  Derek Smith: If that's to drive up their multiple, if that's to drive more clients in, that is up to them.
• 26:03
  Derek Smith: But we need the evidence we give that capacity.
• 26:06
  Derek Smith: And then through our innovation, how do we drive engagement tools, experience tools that they can give to their investors that drives that always on advice model?
• 26:16
  Derek Smith: So I would say we are starting to land things now, but I would say 12 to 18 months really start us leaning into that.
• 26:23
  Derek Smith: An example would be we've got a new client mobile app going live the end of this quarter, so in the next six weeks.
• 26:30
  Derek Smith: That has been fully written in AI in Claude Code. So we have a team working on that.
• 26:35
  Derek Smith: It would have taken 12 months plus to build that in the past.
• 26:39
  Derek Smith: We built a working prototype with clients that connected to our platform, connected to Origo in a week out to clients with real live data.
• 26:47
  Derek Smith: Now, AI helps remove some of the friction that used to take time to build.
• 26:52
  Derek Smith: It doesn't mean that it crafts the best product for you.
• 26:55
  Derek Smith: So you still need the discipline and time to work with clients to test it and learn, and that's what we're doing now.
• 27:03
  Derek Smith: But that speed to market is going to rapidly reduce, and that's where we need to start evidence and not just capacity, but how we are supporting innovation and engagement.
• 27:13
  Derek Smith: Love it.
• 27:14
  Sam Oakes: So time saving. You mentioned there was like 12, the top 12. So in these firms. Yeah.
• 27:19
  Sam Oakes: Can you sort of pick on the spot now? Could you actually name what those 12 things are? Do you know it or run?
• 27:26
  Derek Smith: So I'll name four of them. So they're the first ones that we digitize, so I've got them in my head.
• 27:32
  Derek Smith: So one is how do you change an adviser? So this is an advice firm.
• 27:36
  Derek Smith: And if you think of because of lots of the consolidation in the market, you often have clients moving, firms moving, new advisers coming in, changing books.
• 27:46
  Derek Smith: So just that process of changing which clients map to what to which adviser.
• 27:51
  Derek Smith: And we had 21,000 requests for that last year. So we've fully digitized that process.
• 27:56
  Derek Smith: There's then moving money not just between your accounts, but between all of a family accounts.
• 28:02
  Derek Smith: So if you're managing Junior ISAs, Junior SIPPs, as well as different generations in your family, there is moving those investments, cash to optimize across your whole family network.
• 28:14
  Derek Smith: That's another one of the processes.
• 28:16
  Derek Smith: Then with the try not to be political here, with the changes in inheritance tax and the amount with the freeze on tax bands in the UK, there's more and more people starting to fall into some of the a need for tax planning, let's say.
• 28:31
  Derek Smith: So how do you look at bonds? How do you look at trusts?
• 28:34
  Derek Smith: They're some of the most complex processes because they are often legacy products that need improved.
• 28:40
  Derek Smith: So we've been really looking at that of how do you optimize understanding what trusts could help book at you with, and then uh those setting up of onshore and offshore bonds and forms linked to that.
• 28:53
  Derek Smith: So there's five of the processes we've digitized so far.
• 28:57
  Sam Oakes: Those five, then you mentioned, and you obviously let's go back to this million-minute mission.
• 29:00
  Sam Oakes: How many minutes have you knocked off with those five?
• 29:03
  Derek Smith: So it would be we are a way to we have digitized each of those processes.
• 29:07
  Derek Smith: We haven't turned off the old processes yet because lots of our firms have been using our platform for a long time.
• 29:14
  Derek Smith: So we've been testing and learning with them.
• 29:17
  Derek Smith: Just those five processes, when we scale that out to all our firms, that will give 50,000 minutes per month back to those firms.
• 29:24
  Derek Smith: That's huge. So that's half of our target. We're turning on a new digital request center in four weeks' time.
• 29:31
  Derek Smith: That means that if you want to chart any process and any service journey, there's one point of entry.
• 29:37
  Derek Smith: Now that's to try and again, when we you one of the questions at the start was are platforms too complex?
• 29:44
  Derek Smith: Have we fallen in love with that complexity? Not in love, but have we got used to it?
• 29:49
  Derek Smith: That's where we're trying to remove that.
• 29:51
  Derek Smith: I've seen you, especially for new users, it's hard to learn different platforms.
• 29:56
  Derek Smith: And again, firms often have multiple platforms, especially once you're buying up new firms.
• 30:02
  Derek Smith: So we're trying to do that of say, if you want to start any service journey, you'll have one point of start.
• 30:08
  Derek Smith: And that may have forms to fill in. It may be a pure one-touch process, but you'll start in one place.
• 30:15
  Derek Smith: So that goes live the end of this quarter. As that goes live, then we'll turn off some of our old processes.
• 30:21
  Derek Smith: But we want to do that carefully because lots of the firms, they yeah, they use multiple platforms and multiple pieces of kit.
• 30:29
  Derek Smith: So if you change those processes, communication is critical and really to help educate them on how we're making things better.
• 30:36
  Derek Smith: But we need to think about how that changes their day-to-day process.
• 30:41
  Derek Smith: So we're trying to do that in a soft way now, evidence that it saves time, and then really lean in to educate and teach our um clients about how that will change.
• 30:51
  Sam Oakes: I think communication, education, teaching, implementation, teaching an old dog new tricks is quite difficult.
• 30:56
  Sam Oakes: How are you finding that?
• 30:58
  Sam Oakes: Like with your experience of working with those firms and testing, how um how receptive are they?
• 31:03
  Sam Oakes: And how quickly can you make that positive change within a business?
• 31:07
  Sam Oakes: Because it can be hard to change habits, can't it?
• 31:10
  Derek Smith: Yeah, yeah.
• 31:10
  Derek Smith: And again, that's where I think that's the piece where if you get so the people on my team are building those products and services, that's why it's so important they go and sit with advice firms, understand the administrator, what the paraplanner does day to day, right?
• 31:26
  Derek Smith: Understand what their work stack is, how they do that, to then say to them, okay, from that point of view, you understand their whole jobs to be done, their whole process of what they're doing day to day, and then you need to evidence back why this is better for them because any change can add friction at the start, because there is that piece of yeah, learning a new way.
• 31:47
  Derek Smith: But if you can evidence that that takes out 20%, 30% of a process time, people are open to that.
• 31:53
  Derek Smith: But you need to un you need to demonstrate you understand the problem, not just sell a solution.
• 31:59
  Derek Smith: I think that's how you educate and that's how you change behaviour.
• 32:03
  Sam Oakes: So, what should a genuinely modern technology ecosystem uh sort of allow an advice firm to do that it can easily do today?
• 32:12
  Sam Oakes: What do you think?
• 32:14
  Derek Smith: So I think it's that the end-to-end advice process and service process can be seen, can be administered, and can be offered to the client with minimal friction throughout all that process.
• 32:25
  Derek Smith: There are friction points through all of that.
• 32:28
  Derek Smith: That's that's almost like the simple one that just gets your foot in the door, I would say, for a modern ecosystem, a connected ecosystem for a firm to run.
• 32:37
  Derek Smith: The second pick I talked about is then going into that engagement.
• 32:41
  Derek Smith: How do you understand the behavior, the goals, the risk tolerance of the client?
• 32:46
  Derek Smith: Now, advisers are brilliant at that.
• 32:48
  Derek Smith: They're really good at that in a how they get to know their clients, but how do you set that up as a system of intelligence across your whole book?
• 32:57
  Derek Smith: How do you show flags to say there's I there's triggers for vulnerability?
• 33:01
  Derek Smith: So, for example, if a client's in trouble, they may log in continuously to their investments because they have fear.
• 33:08
  Derek Smith: How do you let the advice firm know that you may want to talk to this client because this is a trigger of vulnerability or risk for your clients?
• 33:17
  Derek Smith: So I think that's there's the piece we talked around a single connected ecosystem that drives the efficiency, and then they're starting to flip those platforms to be systems of intelligence that flag how, when, and why you engage with clients.
• 33:32
  Derek Smith: Kind of emotional technology. A hundred percent.
• 33:35
  Sam Oakes: Emotional connectivity. Yeah. Is what we're missing, right? Is that connectivity from an emotional perspective?
• 33:40
  Sam Oakes: Is that the always on advice thing that you're saying? Like it's always there.
• 33:44
  Derek Smith: Yeah, because I think if you look at that's what we're saying, I think that's where financial planners shine when they understand they can explain the complex in a way that's simple for a client and they bring empathy and understanding of their needs, their families and their goals.
• 34:00
  Derek Smith: The platforms they use and advice tech they use almost don't help that.
• 34:04
  Derek Smith: They give data points, they give processes.
• 34:06
  Derek Smith: So, how do we use that intelligence and empathy in a system to support the firm engaging with their clients at the right time as their life and their needs evolve?
• 34:16
  Derek Smith: Okay, cool.
• 34:17
  Sam Oakes: I'm loving this. What about the cost then?
• 34:19
  Sam Oakes: You know, there's a cost association to giving financial advice, and we often see financial planning companies saying that the magic number is 250,000 investable assets.
• 34:28
  Sam Oakes: Um, anything below that, we're gonna struggle to make a profit on, which creates an advice gap.
• 34:33
  Sam Oakes: So if we're gonna then reduce and I hope you're gonna talk about this, reduce the cost of of delivering the advice, are we talking about that always on advice then becoming the value add to the client that they will want to pay a fee, whether it's monthly or however, to that firm to manage it because they're getting more value, more efficiency?
• 34:52
  Sam Oakes: Is that is that how we're looking?
• 34:54
  Sam Oakes: Because I said this to some people before, like, you know, oh, wouldn't it be great to go out and deliver advice to that market that are under 100k?
• 35:02
  Sam Oakes: And then people say to me, Well, you know, do they want to pay a fee for that advice?
• 35:07
  Sam Oakes: What would you all, you know, let's let's go into the fee. Obviously, time will reduce the cost. Yeah. Yeah.
• 35:13
  Sam Oakes: Yeah. So what's the cost at the moment? How much are we looking to get the cost down to?
• 35:17
  Sam Oakes: And how then can we transfer that efficiency of service always on advice to the client enough that that part of the market will actually pay for it?
• 35:26
  Derek Smith: Yeah. So I think yeah, so I think there's two points there to your point.
• 35:30
  Derek Smith: There's how do you make the unit economics of advice work that opens up the market to people who need it at different demographics, different price points.
• 35:38
  Derek Smith: Yeah, love it. So the first point there, yeah, I think that's where we're looking at greenfield.
• 35:44
  Derek Smith: So when you talked about not building a bag of bits of connecting tech together, on average it costs an advice firm £1,500 to £2,500 per client for their whole cost base to run that.
• 35:54
  Derek Smith: Right.
• 35:55
  Derek Smith: If you build that greenfield now using AI, using systems of intelligence, we think we can get that to sub £500 per client to support firms doing that.
• 36:03
  Derek Smith: That then transforms the unit economics, as you said. Yeah.
• 36:06
  Derek Smith: So although you may start to really engage with clients at £178 to £250 is like the average kind of entry point, that means that you can definitely do more of that.
• 36:16
  Derek Smith: And then if you look across your book, on average, 30 to 40% of a financial planning book at any point in time is unprofitable.
• 36:23
  Derek Smith: So how do you start to really remove that down so there's a better profit, but with the point of being opening up advice to more people?
• 36:31
  Derek Smith: Then to your point around, so that that's all the how do you build that capability from a cost perspective?
• 36:37
  Derek Smith: Your point is still then the second point, though, is there's sometimes it's a price problem, and there's sometimes that the way the industry currently works may not appeal to people who are young, digital native consumers.
• 36:49
  Derek Smith: Yep.
• 36:49
  Derek Smith: Now that that is is not all about age, but there's also people who don't yet see the value of financial advice, and how do we help that?
• 36:57
  Derek Smith: I think that if you go back to whether it is a subscription offering that's more transparent, it's visible, or or it's still asset-based, if you get to a point where it's two or three of your subscriptions a month, then we cannot demonstrate to someone the value of that.
• 37:13
  Derek Smith: We're failing as an industry.
• 37:14
  Derek Smith: So if you add your Apple TV account, your Netflix account, your Prime account, if we can't show the value of financial planning to help you save, plan for your future, support and protect your family, then we've got a problem, right?
• 37:27
  Derek Smith: And I think you can. So I think you can.
• 37:30
  Derek Smith: You need to be able to show, and that's where that all was on piece, that it's a as well as the human empathy, the planning, the support for the long term, that the coaching and the planning is always with you.
• 37:42
  Derek Smith: And yes, you see more micro moments of value.
• 37:44
  Derek Smith: I think blending those two together is will be the secret sauce to unlock that.
• 37:49
  Derek Smith: And this is what Aberdeen's doing for the financial planning profession, then, is it?
• 37:53
  Derek Smith: That's where we're that is in the starting point of what we're researching now.
• 37:58
  Derek Smith: So, yes, we have innovation and prototypes that we're working on with some of our key clients to look at that.
• 38:04
  Derek Smith: So, yes, we are iteratively trying to make improvements on our platform and service today through the efficiency we talked about and the integrations, but we're also working with some of our partners on that innovation side, but that's more stuff to come into the next year and beyond.
• 38:20
  Derek Smith: Okay.
• 38:21
  Sam Oakes: Um, financial planning companies are full of data.
• 38:23
  Sam Oakes: What sort of problems do you think uh they're facing at the moment when it comes to their data, when it comes to AI, CRMs, platforms?
• 38:29
  Sam Oakes: Yeah, are they experiencing lots of problems? Is it too much data, unclear about how to use it?
• 38:33
  Sam Oakes: What's your views and opinions on that? What are you seeing?
• 38:36
  Derek Smith: The the big problem is here is quality. Right.
• 38:38
  Derek Smith: So again, lots of um financial data is across multiple platforms, multiple systems, many are years old, and the data quality to enable integration and then intelligence is not there often.
• 38:50
  Derek Smith: That's one of our core challenges.
• 38:53
  Derek Smith: So again, speak to one client, and when some of the technology used, they've got four different ways to see the name of a client, the same client.
• 39:02
  Derek Smith: And that sounds, doesn't sound a big thing, but it's it is when you start to look at using an advice tech tool that looks across all of your data and gives you recommendations, gives you gives you either draft plans, gives you data to say how do you engage with a client.
• 39:19
  Derek Smith: If there's if there's any errors in that, and I'd piece and I'd advise is AI is giving you advice or giving you recommendation for what to tell a client, that is that is not okay.
• 39:31
  Derek Smith: So it is advice, it's data quality and data integration, because that's how you then unlock the value of AI.
• 39:38
  Derek Smith: So that's that's one of the key challenges we see. Love it.
• 39:42
  Sam Oakes: I love your um aerial view of the financial planning profession, the experience you've got of working with different different firms at different levels, understanding the technology side, that's your background, that's your baby, right?
• 39:55
  Sam Oakes: Um if I and I'm very interested in this by the way.
• 39:57
  Sam Oakes: If I was interested, so if I was to set up my own financial advice business, and it's day one, right?
• 40:03
  Sam Oakes: And you've got I've got the opportunity to sit down with you now and ask you some questions.
• 40:08
  Sam Oakes: If I was to start my financial advice business now, how would you build it? How would I build it?
• 40:14
  Derek Smith: So I'd I would start with that point of saying who is your customer?
• 40:18
  Derek Smith: So we've talked about unit economics and stuff, so kind of forget that.
• 40:22
  Derek Smith: Are you looking at something for someone who has simple advice needs, who's growing accumulation, is it road to retirement?
• 40:30
  Derek Smith: Like what's if you're starting a business from scratch, it's probably unlikely you're gonna go a whole of market offering.
• 40:38
  Derek Smith: So I would start with where is the area that you think you can provide a differentiating service to clients?
• 40:44
  Derek Smith: And that could be a subscription often for more assets.
• 40:48
  Derek Smith: It could be that you think you're an expert in tax and in trust and planning for high net worth as people get more and more complex tax arrangements.
• 40:57
  Derek Smith: So that's where I would say of pick that vertical or niche that you can stand out in, then pick the products, partners, and operating model that is optimized for that.
• 41:08
  Derek Smith: Because the the method of being able to do a subscription offer for simple needs of 100 gate to 2 million investable assets is different to being an expert in high net worth, complex financial planning and trust-based offering and offshore offerings, right?
• 41:24
  Derek Smith: So it's not to say there isn't they don't they those needs can't come together over time, but you need to think about the type of client you can serve, the differentiating factor you can bring, and then pick the partners that enable that.
• 41:39
  Sam Oakes: You mentioned greenfields earlier. What can you just explain what that actually means?
• 41:42
  Derek Smith: Yeah, so I know that's probably me being using technical terms.
• 41:46
  Derek Smith: But um, what that would mean is if you talk about a brown field, that's where you're trying to improve the products and part technical products that you use now by trying to improve them incrementally.
• 41:59
  Derek Smith: Greenfield is where you redesign from scratch. So it is a new venture and new field.
• 42:04
  Derek Smith: So an example would be we've built a new data platform with it in a strategic partnership with Microsoft from zero.
• 42:11
  Derek Smith: So brand new data platform, taking data from our platforms, from CRMs we use to try and unlock new data and insights.
• 42:19
  Derek Smith: And that's an example where we haven't tried to improve the data platform we have now, we've rebuilt it from scratch.
• 42:27
  Derek Smith: And why would you do that?
• 42:28
  Derek Smith: You would do that so that you can unlock the newest data analytics and AI services and sometimes building them onto an existing platform, you're continually facing into quality issues, you're continually facing into that friction on integration.
• 42:44
  Derek Smith: We've built that greenfield so we can unlock the best data platform and services to really then transform the products we can offer to our clients.
• 42:54
  Sam Oakes: So going back to the uh the best business I can build in financial planning, what my data standards, where do I start with that?
• 42:59
  Sam Oakes: And what should I be thinking about when it comes to data and the standards?
• 43:03
  Derek Smith: So it gets what we've tried to do, because I think it is difficult in financial planning.
• 43:07
  Derek Smith: So again, when I've talked about in retail banking, the regulator obviously, and it's it was easier in retail banking, but 10 plus years ago came in and brought in open banking and said to the top seven banks it's more of a oligopoly in that market, that you are going to pay for the implementation of that across the industry, and the benefit will be for fintechs as well as big tech companies.
• 43:29
  Derek Smith: Now, that is more challenging in in the financial planning space because you have you can have protection products, you can have their banking products, you can have investment products, and all the data problems we've talked about.
• 43:41
  Derek Smith: But that's not an excuse.
• 43:42
  Derek Smith: We as an industry need to lean into that, and that's where we've tried to look and say, okay, well, where are the standards?
• 43:49
  Derek Smith: So we've partnered with people like Criterion, right?
• 43:52
  Derek Smith: And we've said that when we build our APIs, so the connection points that uh that a firm or one of their software providers may want to connect.
• 44:00
  Derek Smith: Connect to, we'll follow criterion standards.
• 44:02
  Derek Smith: But equally, with some of the integrations we're building now, there aren't standards yet written.
• 44:07
  Derek Smith: So we are trying to lean back into the industry to work with criterion to write new standards.
• 44:12
  Derek Smith: So I think it's that type of piece where often in our industry at the moment it's best practice rather than mandatory.
• 44:19
  Derek Smith: And I think it's trying to pick that of work with some of those best practice and uh standards, but be part of the solution.
• 44:25
  Derek Smith: So help write and contribute to that.
• 44:27
  Derek Smith: And the more and more that we try and write independent standards, it lets us just add more complexity.
• 44:33
  Derek Smith: So that's how we're trying to do it. What about like the you know technology stack?
• 44:38
  Sam Oakes: I suppose they're getting smaller technology stacks. Would you purposely keep it small?
• 44:41
  Sam Oakes: Or you know, what does it look like in financial planning if you would just say to me, let's um technology stack wise, this is what it looks like.
• 44:48
  Derek Smith: Yeah, so if it was me, I wouldn't I would there's always a debate between picking one partner who's vertical, a va a vertical value chain with all the points of the solution versus a best of breed.
• 45:00
  Derek Smith: Yeah. I think it's somewhere in the middle.
• 45:03
  Derek Smith: So I wouldn't go for every piece of your value, your advice chain being an independent provider.
• 45:09
  Derek Smith: I think that's hard to connect if you're a small firm. So if you've got sub-ten advisers, for example.
• 45:15
  Derek Smith: But I would also say having one vertical integrated one can have problems because it leads to just inflexibility sometimes, right?
• 45:24
  Derek Smith: So I would probably pick two to three different providers and I would look at that piece I was saying.
• 45:30
  Derek Smith: So what how do they follow data standards? Demonstrate that they can integrate, right?
• 45:36
  Derek Smith: Because you will want to pick other parts of software to help your advice journey and the explosion of new tech in the last couple of years will likely continue.
• 45:46
  Derek Smith: So get the providers to demonstrate that flexibility, openness of their platform product services so that you do have foresight to be able to swap people in and out as the kind of technology and the products change over time.
• 46:01
  Sam Oakes: You mentioned like getting the advice. I love the idea of getting the advice cost down to 500 quid.
• 46:05
  Sam Oakes: I think that's amazing. How how realistic is that?
• 46:07
  Sam Oakes: And how how quickly do you think that would that would take to happen?
• 46:10
  Sam Oakes: So if I was thinking about setting up an advice business. Yeah.
• 46:13
  Derek Smith: So I think if you're doing it from scratch, I think you could I think that can be done in the next 12 to 18 months.
• 46:19
  Derek Smith: Really? Oh wow, cool.
• 46:21
  Sam Oakes: Yeah, that's really interesting. I'd have to get in at that point. Yeah. You know?
• 46:24
  Sam Oakes: So it's a nice point to get in at, isn't it? Definitely.
• 46:27
  Sam Oakes: And I do like the whole kind of advice gap and servicing there.
• 46:30
  Sam Oakes: Um, I also think they're just more prone to educational content as well.
• 46:34
  Derek Smith: Yeah.
• 46:35
  Sam Oakes: And also the intergenerational wealth transfer.
• 46:36
  Sam Oakes: I think if you're positioned to be able to give advice to the sons and daughters of those that are going to be inheriting it.
• 46:41
  Sam Oakes: Definitely.
• 46:42
  Derek Smith: And that's that's sorry, that's again what some of the firms that we work with have said that have actually, yeah, how do they now start to drive engagement and education with the people who've got Junior ISAs with them, with Junior SIPPs at a cost-effective way, but to your point, how do you engage them in the way they want?
• 46:59
  Derek Smith: So you were you were talking to be earlier around your contents on TikTok and Instagram, Snapchat.
• 47:04
  Derek Smith: There are different means of engagements with different demographics, right?
• 47:08
  Derek Smith: How are we reaching them where they want to be?
• 47:10
  Derek Smith: And I think that's where technology and providers can help advice firms think differently and engage differently in a cost-effective way, but in a different way than we've given advice in the past.
• 47:21
  Sam Oakes: Do Aberdeen think about that? Do they think about um social media?
• 47:26
  Sam Oakes: Do they think about marketing and content and educating and connecting with the end client?
• 47:34
  Derek Smith: Is that something that you're often thinking about, or is it just not part of the So it is, but we try to do that of how do we help our firms give that content to clients?
• 47:43
  Derek Smith: So we tend to not go direct because we our kind of mission is to champion independent financial advice.
• 47:49
  Derek Smith: We think the best way to do that is by providing content material and services to our firms.
• 47:55
  Derek Smith: So, for example, our tech zone, which is where we give deep technical support on regulation, tax, trust to financial advisers and to those firms.
• 48:03
  Derek Smith: We have over a hundred thousand hits per month on that site, all for deep technical knowledge and trying to make that simple.
• 48:10
  Derek Smith: And that's through PDFs, video content that we want to give to firms to help them engage with their clients rather than us going direct.
• 48:18
  Derek Smith: Do you think you could ever do anything like that?
• 48:21
  Derek Smith: So we've got different, I would say they're different parts of our division.
• 48:26
  Derek Smith: So if you look at our D2C offering is through II, interactive advice. So we interactive investor, apologies.
• 48:32
  Derek Smith: So we would say they their mission is for D2C, and that's a different demographic.
• 48:37
  Derek Smith: Our mission is to live and breathe and support independent advisers.
• 48:41
  Sam Oakes: So with that ecosystem, are you are you supporting people like let's say for me who might want to open up a financial advice business and maybe I'm I'm new to it and I'm within my first year?
• 48:49
  Sam Oakes: Do do you have like an ecosystem? Is that what that ecosystem is that you were talking about?
• 48:54
  Derek Smith: Yeah, yeah, and it it's an area we want to lean into more. So I think it's a great idea.
• 48:58
  Sam Oakes: Yeah. There's so many people that want to get stuck into it.
• 49:00
  Sam Oakes: And they're kind of coming into the profession and there's a lot of old tech and they're cumbersome and it's all over the shop.
• 49:07
  Sam Oakes: And I think like having a centralized, a centralized community with it that that that can kind of really communicate the end-to-end technology and the process, it's just going to be so much easier.
• 49:16
  Sam Oakes: I'd much rather go to you and to that community than to go out to multiple different podcasts or multiple different YouTube channels or log in here and CPDs over here and all of that stuff.
• 49:25
  Sam Oakes: It's just um too much. It's overwhelming.
• 49:28
  Derek Smith: Yeah, and I think it's like so if we try when you're talking about the end clients, always we we try and some of the things we do and the kind of persona research we do that doesn't just look at age, doesn't just look at um I'm I'm 25, that means I must be digitally native.
• 49:44
  Derek Smith: It starts to think of their aspirations, their risk tolerance, their background, their goals.
• 49:50
  Derek Smith: And if you look at people often think of when you get financial advice, you are ultra wealthy.
• 49:56
  Derek Smith: If you look in the UK, a middle band nurse now pays high tax band right for the top end of their money.
• 50:02
  Derek Smith: They need support, they need financial planning. And are we there to support that type of client?
• 50:08
  Derek Smith: And is it at a price point that they need?
• 50:11
  Derek Smith: People wouldn't automatically think a middle band nurse pays the top tax bracket in the UK, right?
• 50:17
  Derek Smith: So the the freezing into tax bands has brought complexity and more planning needs.
• 50:22
  Derek Smith: And I think that piece you said around content engagement, support and that planning lifecycle, there's a far broader range of people who need that now.
• 50:31
  Derek Smith: And with the regulators definitely trying to support that.
• 50:35
  Derek Smith: So with the emergence of target support and with the digitization and AI solutions starting to come, I think blending those two together with your point around content and engagement with people of a much wider range of needs, there's a real unique opportunity there.
• 50:52
  Sam Oakes: Going on the AI channel again. Um what's exciting you about AI?
• 50:55
  Sam Oakes: When you when you see AI and financial planning, financial services at the moment within your space, what is the most exciting thing you're seeing around AI and its capacity to improve the profession?
• 51:07
  Derek Smith: And I know I'll I'll cheat, I'll probably say two things, right?
• 51:11
  Derek Smith: So there's there's the way and speed that we can build services for clients that are differentiating is dramatically different.
• 51:18
  Derek Smith: So I've again I yeah, I've worked for 27 years, I think.
• 51:22
  Derek Smith: Um and I've been in product and technology the whole of that time.
• 51:26
  Derek Smith: And I would say, like, whether that was dot com, whether that was mobile, there's been different things that have heralded kind of changes in how we use technology.
• 51:36
  Derek Smith: I truly think AI is the biggest leap I've ever seen in my life.
• 51:40
  Derek Smith: Right now, are we seeing the value of that yet on an end-consumer basis? Probably not, right?
• 51:46
  Derek Smith: Again, most people will see I asked ChatGPT something, right? Now I'm a Claude guy, so that's what I use.
• 51:53
  Derek Smith: But that the ability, what does that give you?
• 51:56
  Derek Smith: It allows you to access data, content, and information and synthesize it for billions of pieces of data in seconds.
• 52:03
  Derek Smith: The way of how do we get that into those cost economics engagement with clients is only starting to kind of scratch the surface on that.
• 52:11
  Derek Smith: So we talked about the mobile app we're building, we're also building things that says for consolidators and networks, how do they value their book?
• 52:20
  Derek Smith: How do they value the clients they're going to buy?
• 52:24
  Derek Smith: How do they see the value of firms across the whole of the UK?
• 52:28
  Derek Smith: Now, some of these things were all data points that people were trying to pull together.
• 52:33
  Derek Smith: So just the access to that data, the ability to synthesize it, is starting to open up.
• 52:38
  Derek Smith: Then when you get down to the individual user basis, we're trying to build those pieces where don't just build an agent on its own.
• 52:47
  Derek Smith: Build it across the intelligence of all the data, all the engagement you have with clients.
• 52:52
  Derek Smith: So it's that system of intelligence where your conversational AI, like using ChatGPT, understands you, your business, your data, your clients, and can start to unlock insights to that and engagement opportunities that really transform how you give that advice.
• 53:09
  Derek Smith: Now, how we do that, we don't have the solution to that at the moment.
• 53:13
  Derek Smith: We want to work with clients on that, but the opportunity there is just differentiated, right?
• 53:19
  Derek Smith: So we've been trying to put lipstick on a pig and uh automate really parts of processes that might make a 1% difference.
• 53:26
  Derek Smith: Your point around starting a firm from scratch, whether you've got a firm that's a hundred years old or is starting today, we should be thinking about how I can reimagine advice and don't start with that piece of how do I automate a poor process today.
• 53:42
  Derek Smith: Yeah, think about it zero base, think about it from a starting pane now, whether you've been going for 20, 100 years, or it's day one.
• 53:51
  Sam Oakes: Yeah. I love that. That's exactly how I'm thinking. Like that's why I'm holding off.
• 53:55
  Derek Smith: Yeah.
• 53:55
  Sam Oakes: Because I think it's just worth holding off. Because I don't think we're quite there yet.
• 53:58
  Sam Oakes: You know, I think there is stuff happening and just making improvements, but I don't think we're quite there yet.
• 54:03
  Sam Oakes: And I think in like 12, 24 months it's going to be so different.
• 54:06
  Sam Oakes: So I think entering into the profession in 12 to 24 months would be very different to entering into the profession today.
• 54:12
  Derek Smith: So I agree, but if you want to shape what it is in 12 to 18 to 24 months, I'd get involved today.
• 54:17
  Derek Smith: I wouldn't hold back because it's like people saying some of these tools will make errors, and we need to be very careful about that if you're putting it into an actual advice process that a client sees.
• 54:29
  Derek Smith: But the opportunity is exponential.
• 54:32
  Derek Smith: So unless you're in using the tooling now, designing the solutions of tomorrow, you may be behind in 24 months' time.
• 54:39
  Derek Smith: So I'd get actively involved now and let's imagine that together.
• 54:43
  Sam Oakes: I like the idea of empowering the adviser who comes underneath the Financial Planner Life.
• 54:47
  Sam Oakes: Let's say we've got a business called the Financial Planner Life to run their business the way they want to run it, to see as many clients as they possibly can.
• 54:54
  Sam Oakes: And I like the idea of freeing them up from the um sometimes I would consider it to be the stress of um employees.
• 55:00
  Sam Oakes: Yeah. Okay. Headcount.
• 55:01
  Sam Oakes: Do you do you think the headcount is going to reduce considerably within financial planning?
• 55:05
  Sam Oakes: You know, I wouldn't want to build a financial planning business where I've got tons of administrators or tons of paraplanners.
• 55:11
  Sam Oakes: You know, I I A, it's really hard to find those people because there aren't a great deal of them out there.
• 55:16
  Sam Oakes: Um B, it's it's a huge amount of extra management, isn't it? That and there's a cost to the to a business.
• 55:21
  Sam Oakes: And I think like empowering an individual to be able to grow something really spectacular, I think you do need to kind of reduce headcount.
• 55:28
  Sam Oakes: It's my personal opinion. Um, do you think that that's going to happen?
• 55:31
  Sam Oakes: Do you think headcounting will shrink in firms?
• 55:34
  Derek Smith: So I think sorry, I I think it definitely can.
• 55:36
  Derek Smith: It's then your choice as a firm of do you use that capacity for growth? Do you use it to run more efficiently?
• 55:43
  Derek Smith: How do you want to work?
• 55:44
  Derek Smith: So again, we're running with prototypes at the moment where an adviser has different agents that they interact with.
• 55:51
  Derek Smith: And that agent can be looking at how many clients need a review, how many, what's changing the behavior of those clients.
• 55:58
  Derek Smith: So there's one to look at the advice process, the engagement with clients, and the servicing.
• 56:04
  Derek Smith: And if you want as a planner, you can run your business on those agents.
• 56:08
  Derek Smith: There's also then we look at there's a number of businesses started that are for now AI first firms, where all of their support functions, whether that's finance, whether that's operations, they're using agent-based technology.
• 56:22
  Derek Smith: Now, if you want that to be a one-person firm, I think we'll be on the cusp of doing that in the next probably to 18 to 24 months.
• 56:29
  Derek Smith: But if you have 10 people in your firm now and you're serving 100 clients on average and your cost base is 1500 to 2,500, you may want to grow double your book, triple your book, and keep the same headcount the same and the opportunity is there as well.
• 56:44
  Derek Smith: So I think you can do it how you want.
• 56:47
  Sam Oakes: Okay. So final question for you then.
• 56:48
  Sam Oakes: If someone's listening to this right now, what would you what would your advice to be to them within their firm of what they could implement now that would make a massive difference, say, within the next six months?
• 56:58
  Derek Smith: So if you've not used some of the conversational AI that allows you to interact with data across your platforms, I would look and test some of them now.
• 57:06
  Sam Oakes: Yeah.
• 57:06
  Derek Smith: And then I would look and say, don't if you look at how you do car manufacturing, if you look at some different industries where you look at systems thinking, right?
• 57:15
  Derek Smith: So you look at a process end-to-end. I think often we see firms trying to make improvements.
• 57:20
  Derek Smith: I understand, like to it, like like Sky were doing the cycling, where they make incremental benefits in one percent.
• 57:26
  Derek Smith: I think the challenge is if you want to transform advice, you need to take a step back and redesign your processes end-to-end and get partners who will support you do that.
• 57:36
  Derek Smith: Think about that end-to-end journey.
• 57:37
  Derek Smith: So I would sometimes sit your head above and step out and not think about 1% improvements, think about the whole system of your advice journey, your service journey, your operating model.
• 57:48
  Derek Smith: And how do we leap that forward and look ahead to say, how would you do that if you started today?
• 57:53
  Derek Smith: Don't just think about removing percentages of the friction.
• 57:57
  Sam Oakes: That's what I would try to do.
• 57:58
  Derek Smith: I love it.
• 57:59
  Sam Oakes: Now, Derek, thank you so much for spending some time with you today and explaining everything and answering my questions.
• 58:03
  Sam Oakes: And I can sometimes ask probably quite simple questions, but for me, it's really interesting.
• 58:07
  Sam Oakes: And I think for my listeners as well, it's it's good sometimes to simplify things and to kind of just get through it course.
• 58:12
  Sam Oakes: Now, in respect of Aberdeen, if someone now wants to reach out to you or to reach out to Aberdeen and to find out more about the great stuff that you're doing, uh the changes that you're making to improve the platform, you know, what can they do?
• 58:22
  Sam Oakes: Where can they go to? Can we give them a link to follow? Maybe get demonstration back to that community.
• 58:26
  Sam Oakes: What things can they do to interact with you to find out how to improve?
• 58:29
  Derek Smith: If you want direct contact, come to me on LinkedIn. I'm Derek Smith. It's a simple name.
• 58:33
  Derek Smith: Um and I'm at Aberdeen PLC. I'll be listed as the chief product and technology officer.
• 58:38
  Derek Smith: Um equally we'll put in links to see some of the things we've launched recently as well.
• 58:43
  Derek Smith: So we'll put links into our we're typically on our kind of public adviser website, we'll put the content of demos and things that we're moot we're producing.
• 58:52
  Derek Smith: Um and then if they want to contact me directly, it's either derek.smith@aberdeenplc.com.
• 58:57
  Derek Smith: So it can be direct via email, via LinkedIn, and we'll put links to show some of the great work our teams have been doing.
• 59:04
  Sam Oakes: Amazing. Derek, it's been an absolute pleasure to talk with you today.
• 59:06
  Sam Oakes: Really looking forward to seeing how things are progressing.
• 59:08
  Sam Oakes: Um, it sounds really exciting, but um, thank you so much for sharing your journey on the Financial Planner Life Podcast today.
• 59:13
  Derek Smith: Perfect, and thank you for inviting me along.