UK has been a leader in regulation in the wealth space

Speaking at the Lang Cat Advice Tech Catwalk last week (June 21) Durham discussed innovation and the future of the industry. 

He believed that the industry we see today would not exist without the work of the FCA.

“The regulator has leant a huge helping hand in terms of consumer focused regulation, abolishing commissions and the introduction of RDR as well as consumer duty.

“There are good and there are bad sides of regulation but without this consumer focus on regulation, we [FNZ] would not exist as a company because it really forced us to help an industry become very efficient through the use of technology and automation,” Durham explained.

Regulation has generally been a force for good for everybody including the consumer and has created opportunities, according to Durham.

He said: “As an industry we are trying to solve problems like suitability letters through technology. That is the next stage of regulation, in terms of really being able to prove that the advice is complying with the regulation and that the client is being treated fairly.”

Future of advice 

Durham said the big, unsolved problem currently in the industry was the lack of integration between platforms and advice tech. 

“There is definitely going to be a more integrated world in the future and an open connected environment is one that's coming.

"It’s not going to be simple, because lots of the challenges we have are different data models and the accuracy and mapping of it. It is still a massive challenge even if all the data is open,” he explained.

The key evolution that needed to happen in the industry, according to Durham, was ensuring everything was ‘plug and play’.

He added: “AI is also going to play an increasing role. Advice will be one of the professions that will never be replaced by AI. It will support advisers, and make them more efficient, but they will never be replaced by it. 

“This is because ultimately advice is a client who wants to take risk. However, most people don't understand what risk is, if they did, they wouldn't take it. So they need to do that over the long term with something they really care about, which is their lifelong savings. And that's only ever going to be a trust decision. People trust people and that is not going to be replaced by a person trusting the machine.”

Durham believed platforms will become “more open” in the future and move up the value chain and will absorb some of the “boring” aspects of an adviser back office such as fee reconciliations.

He added: “Also making sure that private markets are as accessible to retail investors as public markets in a way that mutual funds are. Extending this concept of open architecture to include that is absolutely key to ensuring clients can get the returns they should get the same way a very high-net-worth client can get today.”

Durham also highlighted that advisers advising clients were ultimately the source of capital that goes into all innovation in every industry. 

“We can be proud of what we do here, despite all the massive complexity regulation that goes with it and compared to some other industries, we can be proud of the pace of which automation has moved. 

“Innovation in this space plays a fundamental role in all innovation and this is where the capital which everybody depends on comes from. So that's a really good place to be and it ultimately does come down to people investing, investing requires advice, and this is absolutely at the core of it,” he added.

alina.khan@ft.com