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For advice practices, getting the tech right is key to the bottom line
Despite a slew of technological advances in a changing world, the financial advice industry as a whole is still reliant on tech from 20 years ago. As growth and scale become harder to achieve, it’s important for advice practices to make efficient use of the right tech tools, according to technology and digital consultancy Finura.
In a recent session on “Better technology decisions to unlock your practice growth,” Finura managing director Peter Worn (pictured) spoke with Matt Van Dijk, general manager, distribution at private wealth platform Praemium about how technological evolution is changing the advice industry and how practitioners can best get their tech houses in order.
“I like to have as holistic a view as possible on technology,” Worn said. “In a world that’s becoming more and more commoditised, the technology decisions we see across the financial advice business are starting to have quite a big impact on the bottom line. The war for talent and the rising costs of having employees are making it harder for advice businesses to scale in the way they used to, and this whole notion of recurring revenue doesn’t exist anymore.”
The only way to truly scale businesses in a long-term, sustainable way, he said, is through more efficient use of technology. He pointed to the explosion of the iPhone market, which took software companies and platform providers by surprise and led to disintermediation of technology decisions.
“There used to be the banks, frankly. And now we’ve got literally thousands of small businesses that are IFAs driving the technology-buying behaviour across the advice industry, and the software companies simply haven’t caught up with that.”
Ninety per cent of the time, the right tech solution for a business involves stripping out technology rather than adding things in, Worn said. Particularly since the COVID-19 pandemic, he has seen “a proliferation of new technology thrown at businesses” resulting in very ad hoc technology stacks.
Advice businesses should be reviewing their tech strategies every 12 months and be clear on the changes they are making before they make them, he said. Finura typically gets two kinds of phone call: clients looking to make a change, such as replacing their CRM, and practices that have already made a change and are seeking to clean up a mess. The majority are of the latter kind, he said.
The relationship-driven nature of the advice industry also means important technology decisions can end up being emotionally driven, based on the belief that technology will solve the problem. “The reality is, that’s not necessarily the right way to think about technology decisions, and the phone calls we’d much prefer to get are before you’ve made that change.”
