Everyone needs to check
their financial health

Joe Parkin
Joe Parkin - Head of Banks and Online
Distributors in the UK at BlackRock

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Joe Parkin explains how WealthTech, BlackRock’s annual meeting of fintech minds, is helping to tackle a new world for financial services

For me one of the most positive recent developments is how technology has enabled people to monitor their health and happiness. Looking around my office I see many colleagues wearing fitness trackers that beep at them if they sit still for too long. Others have wellness apps on their phones to check they are mentally prepared for the day’s challenges.

But I believe there is a third element of health and happiness that is still not discussed enough -- and that is financial wellbeing. 

There is so much evidence that money is the number one cause of stress. I strongly believe that we must do more about financial health: by focusing on financial wellbeing we can achieve the social impact we seek in our everyday lives, both professionally and personally.

We have the technology to make wealth management tools available, we have an underlying desire and responsibility to solve these problems and we have regulatory support.

Yet despite this, the industry still faces significant challenges. When it comes to managing financial health, the facts, collated earlier this year via our annual BlackRock Global Investor Pulse survey, are scary. In the UK as many as 12 million people do not save enough for retirement (this is especially a problem for women). In Europe 50% of the 26 trillion wealth market is in cash that is uninvested and earning zero or negative interest.

Only 3% of people in the UK had access to financial advice last year and only 6% have ever talked money with an advisor. That means that 47 million people in the UK have had no access at all to financial advice.

These extraordinary figures should be a catalyst for the financial services industry to start to address financial inclusion.

Reinventing wealth management

In the past ten years almost every industry has been disrupted. Wealth management is one of the last bastions of the old way of doing things. We have focused very much on the wealthy, without making financial wellbeing part of our everyday lives. We need to change this -- and quickly.

There has been some progress in democratising wealth management in recent years. We have harnessed technology to begin to map out how we might scale up our services to make them available universally.

I admit that this has entailed a significant change for the industry. For hundreds of years we have focused on servicing clients face to face. Everything from systems through to investment products and how we talk to clients has been set up to disintermediate the actual customer.

Robo-advisors have potential, and we were excited about the first wave. Yet they are only part of the story. We need to inspire individuals -- not just by selling them investment products, but by making them think about their dreams and desires and highlighting how financial planning will help them attain these things. That is a challenge, not just for a robo-advisor, but for a human one too.

Why the WealthTech programme?

I believe there are still larger issues at play in encouraging people to think seriously about their financial health and wellbeing. This is why BlackRock has instigated the WealthTech programme as a way to unite the industry over an issue that will define us in future decades.

A few months ago we hosted our annual WealthTech event --  an opportunity for anyone in the industry who shares our vision to meet and listen to inspirational speakers, network with peers and discuss best practices. We supported the event with a thought-leadership campaign to highlight key issues surrounding WealthTech and igniting debate about an industry-wide approach to finding a solution.

Underpinning this initiative is our growing sense of purpose. Financial inclusion is pivotal to both BlackRock and to me personally. Responsibility for long-term money management has shifted from the state and businesses to individuals. The industry must take responsibility for showing them how to achieve financial wellbeing. This challenge gets me out of bed each morning.

There are many reasons to be optimistic. Banking is undergoing a eureka moment and we are seeing interesting and useful money management innovations from challenger banks, long-established financial services companies and the tech giants.

We are also privileged to have relatively straightforward access to large amounts of data that can help people to analyse spending patterns and adjust them if necessary.

As technology becomes more sophisticated, I think we are getting a glimpse of the end game. Rather than multiple apps and spreadsheets, in the future I predict that people will have one app that understands them and knows when to talk to them about all the different things it can throw at them. 

The importance of education

We also need to make education a priority. Taking our message into schools and colleges and showing youngsters how to manage their money is a must. It is utterly depressing how few of our children understand simple concepts such as APR. 

As an industry we need to discuss many issues. What is the most effective and safest way to manage data? How do we encourage millennials and Generation-Zers to save -- is there an opportunity through top up payments on purchases? Perhaps, most important of all, how do we use technology to create services that can be as effective as human advisors with all their years of knowledge and experience?

The WealthTech conference and thought-leadership programme might not have all the answers yet. It is essential, though that we ask the questions and work with our peers to find solutions.

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