Consumer trust isn’t something to be taken for granted, but reports from the UK, US and here at home are all pointing towards an uplift in trust levels around financial advice, which can only be a welcome development.
There are significant tailwinds behind the financial advice industry at the moment, but some major obstacles are still preventing advice practices from taking advantage of surging demand according to a new study from CFS.
Advice tech shakeout predicted for 2022
The last two years have been a near-perfect storm of activity for many financial advisers. The onset of the pandemic placed significant pressure on advisers to respond to client queries at a time of immense stress; many advisers were trying to deal with a flood of new clients as industry numbers dwindled and the big banks walked away from the sector.
It is likely that many financial advisers are thinking the same thing after the last two years of simply hanging on: it’s time to find efficiencies. Naturally, we are all looking towards the technology sector and how we can cut the many regulatory-driven bottlenecks within our businesses.
Anyone who has been considering integrating new technology into their business would be well aware of the plethora of options available. Whereas most industries have a reasonably straightforward and simple “tech stack” where each component communicates with each other, most planning businesses have a stack that ranges anywhere from 10 to 30 individual systems, very few of which are seamlessly integrated.
There is no shortage of fintechs seeking to disrupt the incumbent in IRESS, yet few seem to understand the huge complexity involved in running practices and advising clients. In fact, in recent years many platforms have come to market with seemingly great products only to disappear completely a few years later.
One of the companies trying to help advisory practices gain these efficiencies is Finura Group, founded by Peter Worn, who was previously at Enzumo. With an arm’s length position outside of the day-to-day vagaries of financial planning, Finura is well-placed to understand the environment.
After predicting the potential merger between Netwealth and Praemium in 2021, the group has outlined another round of advice industry predictions for 2022. Not surprisingly, it expects digital advice to heat-up once again, but this time, driven by asset managers and super funds who are seeking to engage directly with their clients. Any adviser has likely seen the growth in this trend of managers communicating and marketing directly with clients in recent years.
Finura expects Microsoft to expand its footprint in the sector with a range of productivity tools, noting Google’s partnership with Hub 24, and Amazon’s with IRESS, as a new competitive landscape.
Most importantly, it suggests consolidation or attrition is likely in the massive fintech space, ultimately driven by the shrinking size of the Australian financial planning market. An addressable market of just 13,000 advisers simply isn’t big enough to sustain this many meetings, according to Worn.
He highlights the merger between ROAR Software and Wealth O2, and suggests further activity will involve Advice Intelligence, Plutosoft and Work Sorted. While also suggesting, “there are too many of them,” when referring to the many Fact Find Platforms.
