CPD: Which tech? How to navigate the advice software maze


More than ever it’s a business imperative to integrate effective technological solutions.

Having accepted the need for – and benefits of – embracing technology, the big question many advice firms are now asking is: which tech? Because it’s not all created equal. In this summary we suggest some steps to take and questions to ask when considering how to get the most from your advice technology.

The scramble for financial advice firms to “get digital” is well and truly on. If the active pushes from ASIC and initiatives from the Federal Treasury encouraging FinTech adoption aren’t enough to get you exploring new software and other technology options, then there are also the very real business imperatives to consider.

The simple fact is, for most advice networks wanting to grow their business using traditional methods, it is financially difficult – if not impossible – to scale beyond traditional adviser-to-client metrics. Advisers must either replicate themselves or their staff to keep pace with growth. This metric is not scalable as costs increase directly in proportion with client numbers.

In many advice practices and wealth management groups, unadvised clients sit un-serviced because the cost of service has outgrown the revenue generated by them. There has been significant focus by ASIC on practices accepting fees from clients without providing a legitimate service, and justifiably so.

If we thus accept that the ability to scale up, remain profitable and fulfil our obligations to serve our clients requires technology, we must then move to the question of which technology to look for.

In a crowded market, heavily populated by newcomers, it’s small wonder that confusion – and in some cases, misinformation – reigns. With a seemingly never-ending and ever-growing catalogue of features and benefits on offer, it’s more important than ever to be able to cut through the confusion and zero in on what matters most.

Of course, what’s most important to any individual adviser or group will depend on your firm, its size and position, its licensee or ownership status, client profiles and so on. However, irrespective of all the above, there are some requirements that will always be key.

Above and beyond compliance

Just as your role as an adviser starts and ends with compliance, so too should your software or digital advice tools. If you’re looking at a solution that leaves anything in doubt or to chance, look elsewhere.

Some key things to consider:

  • The quality and completeness of the advice documentation provided. Does the technology you’re looking at generate a detailed fact-find, risk profile and goals identification as well as other information that can support your fulfilment of BID? What about Opt-in?
  • How flexible and customisable is the documentation, especially in relation to Statements of Advice? Can these be tailored to suit your organisation’s – and clients’ – needs?
  • The extent to which key advice processes can be automated – especially at the simpler end of the advice scale
  • What gaps will still need to be manually filled – and what processes or other resources do you have in place to ensure this happens? Is there another solution out there that will fill these gaps?

Keep it clean

If you’re like most advisers, you have a love hate relationship with your client data. On the love side, when your data is good it is a key asset to your business. It drives your relationships and shapes the way you engage and communicate with clients, giving you the ability to offer the most appropriate service offerings to the right client segments.

When data works well, it helps with tracking the sales leads process, allows you to actively market and campaign service offerings to existing and prospective clients, generate rich and accurate reports both individually and across your entire client base and ensure you meet your compliance and best governance requirements.

Cue now the flip side: the hate relationship. Many businesses of all kinds struggle with poor data quality, and advice businesses are no exception. Even the best technology will not perform well if it is based on dirty data. Just a few issues that can effectively undermine even the best of technological solutions include:

  • Duplicate clients
  • Dirty data records
  • Incomplete client records – missing information (email, phone etc)
  • Dead or dormant data feeds
  • Unmapped revenue

Consider also the widely accepted “1-10-100 rule”, which states that:

  • The cost of preventing entry of bad data into a CRM is $1 (prevention cost)
  • The cost of correcting bad data in a CRM is $10 (correction cost)
  • The cost of bad data residing in a CRM is $100 (failure cost)

Making data integrity a priority before you go down the tech route is a great step toward saving time, effort, money and mistakes. That means choosing a solution and/or a provider that can assist you in effectively identifying data problems and, crucially, fixing them before any new tech comes onstream and compounds the existing problems.

Of course, if yours is one of the few advice firms with no data issues, feel free to disregard this message!

Compatibility and familiarity matters

As obvious as it may sound, the fact is that compatibility and integration issues remain a major bugbear of advice firms seeking to expand and improve their tech. The reality of the brave new world of many new and exciting, feature-rich technology solutions is that they never work to full potential, whether due to user error or because their performance is impaired by poor compatibility and incomplete integration.

Take the increasingly common situation of applying a digital advice stream within your business. This will be made much easier if your firm is already familiar with the look, feel and functionality of the new advice-related components – and if the new solution offers tried and tested compatibility with your existing platform.

The example that springs to mind here is XPLAN, simply because it is the most popular full-advice planning software in Australia. The rollout for an advice practice wanting to go digital has less risk when the participants don’t have to change their core service software. So choosing a tech option that’s XPLAN compatible would, in this instance, have to sit high in the consideration suite.

Direct links to efficiency, profitability and growth

While it is clearly recognised that technology has the capability to deliver scale, profitability and growth, the reality is that it only does so if it works.

You should be able to identify, model and predict how and where your new technology – be it new software or digital advice technology – will hit your bottom line, whether through savings and efficiencies by eliminating manual processes, by reaching more clients, or both.

Ask your provider to “show you the money” when they demonstrate their technology, and make sure you understand exactly where their projections are coming from, and how they achieved them.

Some areas that can have direct impact on your practice growth include:

  • Integrated workflow. Does the solution support this, to avoid duplication and mistakes and free up time to focus on high value tasks?
  • Automating review preparation and FDS obligations
  • Incubating clients that are not yet ready for face to face advice
  • Presenting advice opportunities without the need to meet face to face
  • Protecting against intergenerational wealth flowing FUM away from your business
  • Does the solution allow you to implement a segmented fee scale not attainable using traditional methods?

Of course, there are myriad other considerations when it comes to embarking on the digital path – these are just a few. However, if you do address these basics first, you’ll be more likely to enjoy a smoother journey than if you go straight for the bells and the whistles.


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