Fraser Hamilton Midwinter CTO

Identifying the type of technology that can deliver the most bang for buck is crucial as advice businesses continue to look for ways to maximise their investment in tech, according to Midwinter’s Chief Technology Officer Fraser Hamilton.

Technology powers today’s advice businesses, but all tech is not created equal.

The average advice firm now spends 7.4% of its revenue across 14 different types of technology, according to Netwealth’s 2021 AdviceTech Report.

Technology delivers a range of benefits such as allowing advisers to spend more time with clients, improving affordability, growing client numbers, and increasing revenue – but only if the right type of tech is selected.

Some technology has become so ubiquitous that it’s now effectively a commodity with barely any difference in the core product between providers.

The differences between email, cloud storage, and document signing services are often minimal. One product rarely provides an advantage over another: while there are differences such as cyber-security or ancillary services, few of these are game changers for an advice practice.

Advisers should instead focus their time on selecting technology where the differentiation is significant, and where solutions may vastly vary in terms of the cost saving, efficiency boost, or improved client experience they deliver.

A better client experience and greater personalisation

I recently requested a change to my life insurance policy. In response, my insurer sent me a 90-page document. I had to print 12 pages, then sign and scan the relevant sections, before returning it.

This is an unacceptable client experience, yet one that is still all too common.

Archaic paper-based processes like this still dominate financial services, despite a massive digital uptake among consumers in the wake of the COVID-19 pandemic.

The technology for simplified digital interactions exists today. Financial advisers just need to identify client facing solutions that suit their business and ensure they are digital friendly, engaging, and easy-to-use.

Examples include easily generating and sharing a Statement of Advice or offering clients the ability to complete a well-designed digital Fact Find at home.

A good design aesthetic can also help make financial matters – which many people view as dull or complex – clearer and more compelling. A visually engaging interface is more than a luxury; it is a necessity if advisers are to effectively educate their clients and demonstrate how their decisions will impact their overall financial situation.

Boost efficiency, review common processes

Creating a better client experience that is more personalised traditionally takes more time, which advisers can ill afford. It is crucial that advisers select the right type of technology to improve their efficiency.

Examples are everywhere, yet many advisers remain mired in manual processes.

While my insurer recently asked me to fill in a paper-based form, even the NSW’s government has created a more efficient pathway. Paper-based forms are no longer required for many NSW government services, for example a car registration renewal – these can all be done online at the Service NSW site or app.

Similarly, advisers now have multiple technology options that can streamline their common tasks.

Making the right choice requires a review of the full advice process and client touch points: what areas are taking the most time and can be streamlined? What areas do clients pay attention to and what do they truly value?

Manual steps should be automated where possible.

Software should be able to automatically access and incorporate common external data feeds into an advice platform. Modelling tools should be able to run complex calculations quickly using common economic and financial assumptions.

These examples highlight areas where selecting the right technology can make a significant difference.

Tech should make compliance a foundation

Advisers have been grappling with a heavy regulatory burden for years.

Even as markets plunged in the wake of the first COVID-19 wave in April 2020, compliance ranked as advisers top concern according to research by Investment Trends.

It has prompted the government to announce a quality of advice review to streamline regulations and make advice more affordable; although it is unlikely this will lead to a regulatory change anytime soon, and even if and when it does, technology will still have a significant role to play.

“The review should have regard to enabling innovation and the development of technological solutions including the use of regulatory technology and digital advice,” the review discussion paper said.

It’s impossible (or at least impractical) to stay compliant without technology while servicing an average 100-200 clients. Many practices still struggle to implement basic processes to remind them when client fee renewal notices are due or to turn off ongoing fees.

An advice technology platform should make this simple while storing such information in the cloud so that it is easily available. Does it allow for a quick comparison of options on the approved product list (APL) based on a client’s personal needs?

Streamlined compliance underpins a more efficient practice, as well as a higher quality of advice, but technology must be the foundation.

Reviewing the unique needs of your own practice will help you select the right type of technology that will deliver the greatest payoff.

Our free eBook ‘How to choose the right advice software for your practice’ provides a framework to help Advisers and Practice Owners review their advice technology requirements so they can select the software that is best suited to their needs. Download the eBook here.

Find out how Midwinter can help you provide better financial advice.

Subscribe to receive news & insights from Midwinter