Traditional customer service still has an important role to play in our faceless digital age, says James Knapman, founder of Fenland Financial Planning.
What’s been the biggest single change in financial services during your career.
The move online. When I started in the bank in 2001, online banking was barely a thing, Chip and PIN hadn’t been launched and the most you could do on a mobile phone was play Snake (if you had a Nokia). Most customers used the bank every week, they were well staffed, and you could solve all your needs there and then.
It was also the place where people received advice on investments, pensions, insurance, mortgages etc and because back then everything was commission based, clients didn’t pay for the advice up front (albeit they paid for it in charges) – so there were no perceived barriers to seeking advice.
Now, you can do everything online and ‘robo-advice’ is beginning to fill a gap in the market for people to get some basic advice on those products online. However, I am still a huge believer that nothing beats the reassurance provided when you look someone in the eye and say ‘yes, that’s the right thing to do’.
Why did you decide to ‘go it alone’?
Partly because I saw an opportunity and a gap in the market and thought that I could better myself and provide for my family.
Partly because I wanted to do things differently. Where I was before, whilst I loved the clients – and the service provided by the company was excellent – the business model was geared towards ‘wealth management’ and I often found myself having to turn away ‘lower value’ clients.
Having been raised in a working-class area of the North-West, the idea that I could only help those that were already wealthy didn’t sit right. I know that my margins will be lower and it’s a tougher business plan, but helping people who actually need it feels so much better!
What has the response been like from private customers/businesses?
Amazing. Everyone has been so supportive, and many of my previous business contacts and clients have continued to work with me. They have also helped to spread the word and find me new clients and I have been so grateful for that help in the first 12 months of business.
Financial advice can be a very personal service, and I am often involved in helping clients make major life decisions, so that forges quite strong relationships. My clients get to know me, know about my kids and my dog, and know when to mention the football (or not). You simply can’t replicate those relationships with robo-advice!
Do you think the banks have left a gap in the market / are ignoring customer needs (for all ages)? Is there too much of a reliance on digital? Why isn’t the ‘human touch’ valued anymore?
Yes, yes, and because the ‘human touch’ costs more!
There are lots of reasons for this: the low-interest rate environment we’ve been in since the credit crunch (2008-09); the retail distribution review (2012) removing commission from many products; and tighter regulation following multiply miss-selling scandals meant that the banks margins are much lower (and many would argue, rightly so).
Add to that the low footfall in branches as younger clients embrace digital for simpler transactions and it just made their business models untenable.
I don’t think they underestimate the benefit of the ‘human touch’, they simply can’t find a way of effectively providing it whilst also keeping shareholders happy.
What does Fenland do differently?
A focus on Financial Education. I’ve begun to see myself more as a financial coach than a financial advisor. I’ve worked with peers where advice means ‘telling’ you what to do, and ironically that can work, because for a lot of clients that’s exactly what they want. However, my focus is on helping people understand why, so they can make the decisions themselves and avoid mistakes.
I see these mistakes over and over again, and it is because people don’t have anyone to ask. Younger clients would rather invest in crypto than save for a house deposit because they don’t understand the consequences, older clients will encash pensions because they don’t understand them, many clients would prefer to invest in cash than stocks and shares because they don’t understand the risk and rewards.
Biggest lessons learned over the last year / biggest challenges?
That there is a change in mindset required from being an employee, to being a business owner.
It has been so refreshing not answering to anyone, and being able to work flexibly and manage my own diary – but you can’t just relax and put your feet up, you’ve got to work twice as hard because there are so many other things to think about, and you don’t have a fixed paycheque coming in at the end of the month, so you’ve got to make sure you’ve got a pipeline of business.
I’ve also learned that I don’t work particularly well from home. I know it works for some people, but I can be too easily distracted (even with a good set-up), and home was where I relaxed and stopped thinking about work – but that’s not possible when you work from home.
Do you still plan to open an office and recruit staff?
Absolutely, and the sooner the better, for all the reasons above. I initially had a mindset of getting myself established first before increasing my commitments, but the business owner mindset now has me thinking about implementing this sooner.
There is a gap in the market, and in Downham Market, there is nowhere else offering the services I could offer – at least not visibly – so an investment in an office in a prominent position is likely to pay for itself.
In business, you should always play to your strengths and mine has always been in front of people, and in coaching. Therefore, recruiting staff, especially for the admin side of the job which then free’s up my time, also makes good business sense.
How has the Budget affected your business plans in short and long term?
It hasn’t really. Yes, the budget is going to cost me (Capital Gains, Employers NI, IHT on pensions etc) but it is also going to present opportunities because it gives people more reasons to talk to a financial planner! As much as people understand the need for taxes, nobody likes paying them, especially when you’re retired and paid taxes all your life!
How do you think UK financial services will evolve?
Digital won’t go away, and I don’t think there will be any high street banks in 10 years’ time. Banking will all be online.
However, I do think there will still be demand for face-to-face advice, including with the younger generation (even if it is on video calls). There will always be a place for the ‘human touch’ and I was reminded of this recently when my daughter got her first job down at the local pub. She is absolutely loving it, and the reason? “The interaction with people”.
Technology will change society rapidly, but you won’t undo thousands of years of evolution overnight. People will still need people.
