The mix of home and office working is set to stay in the financial advice market.
The days of long, hot train journeys are becoming less frequent, replaced by the thrill of watching daytime television while reading regulatory documents.
The Financial Conduct Authority (FCA) has also seen the light and announced that it will be evaluating firms considering remote or hybrid working on a case-by-case basis.
These businesses will be required to prove that remote working does not, or is unlikely to, cause detriment to consumers, damage the integrity of the market, increase the risk of financial crime and reduce competition.
International Adviser spoke with Sandringham Financial Partners, M&G Wealth, Progeny, IWP, Quilter and Tenet to discuss what advice firms must do to help staff create a suitable, compliant home working environment.
The FCA said that firms should also be able to prove that the hybrid working model will not prevent the regulator from receiving information about a company, or the accuracy of the Financial Services Register.
Firms must prove an appropriate culture can be put in place and evidence that their activities do not require an office location.
Tim Sargisson, chief executive of Sandringham Financial Partners, said that advice firms need to continue to comply with regulatory responsibilities and ensure the FCA has access to information about the firm.
They must also make sure there is no increased risk of financial crime or detriment to consumers.
Amanda Cassidy, managing director of Quilter Financial Advisers, added: “The pandemic forced us to quickly adopt a ‘new normal’, which has continued even as offices have been able to reopen. To ensure advice firms meet FCA requirements on hybrid working, they will need to be aware of and follow the FCA’s guidelines and maintain best practice.”
When it came to changing M&G Wealth Advice to a self-employed model, deputy managing director Richard Caldicott said the firm had “full and transparent exchanges with the FCA”.
“We make the FCA aware of all our developments, how we manage our advice firms within the umbrella of M&G Wealth and the extensive range of support they receive.
“Ultimately, like ourselves, the FCA wants to ensure the best protection, experiences and outcomes for customers and ensure the highest standard and most suitable regulated advice is being delivered to them.”
Of course, the mental health of staff and financial safety of clients are paramount when talking about home or hybrid working.
The fact that the FCA is even looking at home working in financial services suggests that it is a successful and conducive business environment.
But balance and individual responsibilties are key elements that need to be taken into account.
Les Cantlay, chief risk officer at IWP, said: “The pandemic forced us to swiftly implement remote working, but we adapted successfully; advisers and paraplanners have still been able to interact with their clients, while also managing their responsibilities and workloads. As a result, we intend to continue offering advisers the flexibility to work on a hybrid basis. For administrative staff, however, we’ve experienced some challenges.
“They’ve struggled to perform all duties remotely and many have either returned to the office full-time or are working on a hybrid basis, which entails spending one or two days from home. In most cases, we’ve implemented a rota basis to ensure staff are always present in the office. Also, to support them with the challenges they are facing, we’ve introduced a policy guide.”
Sargisson added that it has been “fairly straightforward” for his firm, and “as long as you have a phone and a laptop you can work pretty much anywhere these days”.
“Our teams are allocated two days each week when they are required to work from the office,” he said. “Hot desks are available on other days should staff wish to work more days in the office.”
But not all firms have had it all plain sailing with hybrid and home working.
Neil Moles, chief executive of Progeny, said: “For all the good work that advisers, firms and clients have been doing in rapidly adapting and transitioning, not all parts of our industry have been so responsive. Whilst we are surging ahead with remote working and accelerating our engagement with technology, platforms and insurance providers are largely lumbering in our wake.
“They are not evolving fast enough to meet their responsibilities to us as firms, and by extension, our clients and this is a situation that puts us all at risk. Platforms and providers, therefore, need to take an active interest in what firms and clients want and what they are trying to achieve.”
Pros and cons
Not everyone will be able to get on with home working, but it does have its upside.
Quilter’s Cassidy said: “Hybrid advice can be greatly beneficial as it facilitates choice for advisers and customers alike. Removing the need to travel gives advisers multiple hours back in the day, as well as helping provide some ‘green’ credentials. These hours may be utilised to provide more advice, upskill or simply to give a better work/life balance.”
Caldicott said: “There are some obvious time and cost savings – no need to travel to or incur the expenses of running an office for example. The most important aspect though is to deliver to customers the way that suits them and deliver the best advice experiences and outcomes to them. That can be quite an individual approach depending on customer needs and location issues.”
But as much as home working has its ups, it does lead to many issues for staff and clients.
Sandringham’s Sargisson noted a list of cons of home working:
- It doesn’t suit everyone;
- Staff feeling isolated;
- Difficulty monitoring performance;
- Home distractions;
- Problems with staff development, particularly the younger members;
- Information security risk;
- Negative impact on mental health;
- Decreased staff morale; and
- Poor broadband speeds.
One of the key problems with home working is cyber defence.
Attacks are on the rise and, unfortunately, home office systems are not fully equipped like corporate offices to deal with cyber criminals.
So, how can firms keep client documentation safe and comply with FCA regulation with home working?
Cassidy said: “When dealing with client data, it is absolutely critical to ensure we do all we can to keep information secure. The pandemic and subsequent trend towards more home working adds new challenges to contend with, making it all the more important to ensure cyber security remains a priority. At Quilter, we ensure all colleagues receive training to help them identify and prevent a variety of cyber-attacks.
“Additionally, Quilter provides ‘Stay safe online’ advice to its customers and colleagues which includes a list of the Quilter group’s company websites and official email addresses to allow them to safely navigate the online world and help them identify anything that does not look quite right. This is a simple practice that all businesses should follow to help keep their customers and colleagues safe and minimise the damage they could face as a result of phishing attacks.
“Additionally, cyber security remains extremely important. With advisers and colleagues working from home, data protection is all the more vital and firms should ensure their employees are trained to effectively manage data and be able to spot potential cyber security risks or attacks.”
M&G Wealth’s Caldicott added: “For many years we have taken cyber-threat protection as a core part of our operations. The uniqueness of this period has brought this further into a sharp focus as well as presenting opportunities for the perpetrators of such acts.
“The threat is always there and something we are alive to and extremely vigilant about. We undertake regular training, testing and education modules with all our colleagues and advice firms. We will continue to invest significantly to combat this.”
The financial advice sector is currently going through an exciting yet intimidating technological transformation to allow concepts like home working happen with ease.
There is no sign of stopping hybrid working, it is just about how much advisers embrace the change.
Mark Scanlon, chief executive at Tenet, said: “Hybrid working is the present, never mind the future, but it looks here to stay and the key for business success is adoption of the right technology solutions to improve efficiency, security and customer outcomes.
“With the right technology, hybrid working offers a huge opportunity for greater value add and helping customers on their journey towards financial peace of mind.”
Cassidy added: “Hybrid advice is not just a trend, but is rather an advice model that arguably should have been utilised for a long time prior to the pandemic. A hybrid advice model will play a big part in the future of the sector and will help the industry to keep pace with changing client preferences.
“The pandemic has acted as a catalyst to improve the take up of digital advice and a hybrid approach benefits both advisers and clients. Advisers will reduce the amount of time spent travelling which allows for improved productivity and work/life balance, and clients are able to access advice in a way that suits their needs.
“In terms of advisers, it is likely that they will continue to embrace digital advice and will mix in person meetings with digital. Not only may this be favoured by clients, but hybrid advice allows advisers to reclaim multiple hours of their working day that previously would have been spent travelling to meetings planned by an expert like this DC corporate event planner. These hours may now be used far more efficiently and should support a better work/life balance.
“We see hybrid advice having a significant positive impact on the advice community, as well as on clients as they can continue to receive advice in a way that suits them.”