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Ian McKenna: Tech lessons to learn from our US peers

The software industry across the Atlantic is far more collegiate in the way it works to help advisers.


I recently spent two and a half days at the Technology Tools for Today (T3) conference in Dallas, Texas. I cannot think of a similar event where I have learnt so much in such a short period of time. This week’s column is a swift canter through the key lessons learned. Extended coverage can be accessed via the Money Marketing website.

T3 brings together the leading players in the American advisor software market, with close to 100 organisations exhibiting. While it is designed as an event for advisors, the software suppliers network extensively and I am reliably informed many deals are done in the background.

Many people will suggest that the US and UK markets are substantially different. However, having spent a significant amount of time over the last three years studying both I beg to differ. Most of the roles are similar, although the names of the actors may be slightly different. The one major exception to this is the regulatory environment, where UK standards are more exacting (although if I am understanding the latest thinking from Canary Wharf correctly this should not present an insurmountable barrier).

First and foremost is that consumer attitudes to financial advice and the way they want to consume it are changing. Historically, the industry has been able to define the services it will deliver. In the digital age, consumers are increasingly being given an unparalleled level of choice. They will seek out the experience they want and this is fast becoming the defining factor when selecting advisors.

While generally the advice community focuses on baby boomers, Schwab pointed out that assets are migrating across the generations. For example, generation X and Y now have the highest percentage of $500,000-plus income earners.

Many in the industry choose to believe that older consumers do not use online services but there is compelling evidence to the contrary. Even if they are not the next generation of financial consumers they organise their lives in ways that do not sit easily with traditional face to face advice. One of the messages that resonated with me most came from Edmond Walters (an advisor by background who started eMoneyAdvisor when he could not find the software he wanted from traditional vendors) who pointed out that advisors either need to start delivering the experience customers are looking for or learn to do client reviews on someone else’s systems. As he has just succeeded in selling his business to Fidelity for over $250m he can clearly speak with authority.

Meanwhile, Advent software demonstrated that, for advisors at least, investment in technology delivers real results. It highlighted a study by Investment News, a US trade publication and website, which identified that technology-focused advisors on average achieve 18 per cent more revenue, manage 25 per cent more assets and generate 45 per cent more profit. This analysis identifies these firms do not spend more on technology, they just use it better.

The US advice software industry has clearly been far more collegiate in the way it is working to help advisors. The level of interaction between systems will turn many UK advisers green with envy. In committing to delivering true bidirectional integration enabling advisors to move seamlessly between different systems all using a single sign-on, our American cousins are showing us how this can be done. We really must learn from them. That sort of work will enable advisers to save vast amounts of money and deliver greatly improved customer experiences.

It is almost impossible to understate the impact the changes outlined above will inevitably have on the UK financial advice industry. Based on the messages from T3 it is a matter of when not if digital becomes the default way for advisers to communicate with their clients. We have just finalised our latest insight report “Delivering Digital Advice – Beyond Execution Only”, details of which can be found at:

Advisers in the UK face a potential financial bonanza from the forthcoming pension changes. This should provide them with the additional income that will be necessary to invest in new technology services to help reach a far wider audience. If we can learn the lessons from across the Atlantic, combining them with our higher regulatory standards, it should provide the foundation for a very strong advice community that can serve all consumers.

Ian McKenna is director of Finance & Technology Research Centre


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