Mind the gap

Technology and financial planning


In a post-RDR world, technology has the potential to either be a financial advisor’s greatest asset or biggest headache.

The opportunities are endless. Just think, artificial intelligence and machine learning could take care of the repetitive, mundane tasks that are hugely time consuming but never fully appreciated by the client.

Fully integrated Customer Relationship Management (CRM) systems, financial planning and revenue reconciliation tools, with complete data integrity, could provide a reliable and rich picture of where the most profitable business is coming from and where unexplored potential for new business lies.

Advisors, knowing their clients’ information is secure and accurate, could then offer them impressive wealth portals to access independently, empowering them to take charge of their financial destiny – in partnership with their financial advisor.

Just these three scenarios, which are infinitely possible, would free up the financial advisor to focus on more rewarding and valuable interactions with the client, who, given the highly personalised quality of advice they are receiving, would pay up for these ongoing, premium professional services.

But what is the state of play in the financial services sector as we stand? And how far off from this holy grail is the South African financial planning industry?

We set out to better understand the gaps and trends in the local industry, sourcing statistics via survey questionnaires. Respondents to surveys were South African end-users of industry technology, including independent financial advisors and tied and multi-tied advisors connected with corporate entities.

Our 2018 survey findings provided valuable insights into the current gaps in the advice technology market. In quantifying and understanding these gaps, financial advisors – and tech providers – can be well-equipped to understand where technology may be falling short and what they need to do about it. The insights may also prompt advisors to look into systems they aren’t even considering using at the moment. In this way, advisors could embrace the full power of technology on offer – and any exciting innovations that come down the line.

We delve into the key findings that emerged from our research below.

Implementation and ongoing support is not ideal

According to our research, satisfaction levels with financial planning technology are highly reliant on the quality of ongoing implementation and support to end-users.

That’s because few practices employ resources with the skills or experience to effectively implement, deploy, support and enhance technology solutions.

However, it appears training offered by the technology provider doesn’t fill the gap. While software vendors provide initial implementation, they can’t fulfil the ongoing business development needs for practices, particularly where there’s no aptitude in the practice for it or a comprehensive strategic business plan.

In the end, poor adoption means that many practices revert to inefficient manual processes – taking them back to square one.

Integration of multiple software systems a rare beast

Over 80% of businesses use multiple software tools, in combination, to meet different needs across the business. The vast majority are not integrated at all and many industry technology providers still fail to accept the need for best-of-breed integration models.

The downside of this is that not only do advisors not experience the simplicity and power of a fully integrated system, but also separate, manually maintained databases of client information become increasingly inconsistent over time. The result is that the advisor has no “master” view of the client.

Sharing of information across multiple departments servicing the same clients is problematic and it is impossible to produce meaningful management information or to manage business risks and opportunities. This will be increasingly important as we head into an RDR-regulated environment.

The research also showed that an increasing numbers of advisors are making use of product provider or asset manager financial planning tools. These tools are often “free”, hence the take-up, but are typically not integrated to enable the sharing of information with other applications of practices’ choice, hence broadening the “single view of the client” gap.

Advisor challenges and tech solutions are at odds with each other

There seems to be a gap between the challenges articulated by advisors versus the solutions marketed. For instance, currently client portals aren’t an imaginable possibility for practices who already feel overwhelmed and are still struggling with simpler problems, like document management or transitioning from paper to digital environments.

Instead, they often cite “staying ahead” and “balancing cost and value” as their biggest challenges when it comes to technology. This highlights how difficult it is, as it stands now, for technology providers to take their users on a “customer journey”.

With that in mind, there is clearly much work that needs to be done in making this journey less intimidating. Much will also depend on whether it is clear to advisors how much long-term value a fully integrated, power-suite of tech capabilities could add to their practices.

Grappling with data integrity

The research also found that data integrity is a huge problem – and in a post-RDR world this will become a massive risk, if it isn’t already.

Respondents indicated that the bulk of client information is manually collected, transcribed, maintained and distributed. Data that is automated and electronically distributed, usually investment and assurance data feeds, augments manually captured information in a central database, but does not replace it. This presents various problems:

  • Separate systems most frequently mean separate databases, which doesn’t do much towards a centralised set of client information
  • Revenue data is seldom connected with Customer Relationship Management (CRM) software or financial planning data, and therefore the simple act of trusting that all your paying clients are included in your client management or review processes is problematic
  • Most businesses don’t know how, or don’t have the time, to develop a centralised data integrity strategy, much less consolidate the disparate information from multiple sources

The bottom line is that financial advice as we know it now will undergo further disruption – driven by both consumer demand and legislative reform – but it’s not going to happen in one fell swoop tomorrow. Getting the right foundations in place now, sorting out the little problems and focusing on efficiency and customer engagement strategies supported in the background by technology, is key. 

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