In our conversations with advisers, two themes tend to come up repeatedly: It’s getting more expensive to advise and there aren’t enough hours in the day to get everything done.
With increasing compliance and ongoing education, the demands on advisers’ time are mounting, often without a commensurate increase in revenue or practice profitability.
To solve this dilemma, an increasing number of advisers are turning to technology to trim down on the hours they spend on admin and compliance. While some are bringing a select few new programs inhouse, others are outsourcing almost all paperwork to third parties.
It’s a trend we expect to continue in the next few years, with the biggest investments expected in technology that can prepare SOAs, manage compliance risk and ASIC obligations and streamline the client review process.
While many advisers have already gone all-in on technologies that do one or more of these things, there’s still a friction point between prospective cost savings versus the initial outlay. As a result, some advisers are still taking more conservative positions on administrative or compliance technology. This may be partly addressed as new, lower-cost providers come to market.
Technology and performance
Despite hesitation from some advisers, the COVID-19 pandemic has made the adoption of at least some technology platforms essential to the continuation of business.
There is also evidence greater technology adoption may be associated with business performance. Last year, netwealth’s AdviceTech report found a correlation between commercial success (growth in FUA and FUA per active client) and technology adoption, with 12 per cent of the surveyed adviser market ranking high on both metrics.
Source: 2020 Netwealth AdviceTech report
At the other end of the spectrum, netwealth’s survey of more than 300 advice firms found almost a quarter (22.5 per cent) of advisers were “laggards”, with the lowest scores for both technology uptake and commercial success.
It’s important to note this research was conducted before the start of the pandemic and the upcoming version may look different, given that everyone was restricted to their homes for at least a few months in 2020. Having said that, those who had finessed technology in place are likely to have been better placed for the transition to remote working.
Not all adviser technology is rated equally
Software providers are recognising the opportunity from stretched advisers, with a number claiming to be an integral part of the 2021 advice business. However, our research has shown some providers’ offerings are considered more favourably than others.
When we asked advisers to rate software providers, the more traditional players received lower net promoter scores than newer players. For example, Class and PlatformPlus received higher net promoter scores than some of the stalwarts, such as XPLAN and Salesforce.
Sofware providers NPS
Source: AR Data
Given advisers’ growing appetite for innovation at a lower price point, the pressure will be on both incumbents and new players to free up advisers’ time for clients.