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Mariam Pourshoushtari: Why tech is letting advisers down

Firms are finding stepping up their technology game easier said than done

Advisers are being told time and again to step up their tech game – not just in their offerings to clients, but more practically in automating the more mechanical aspects of advice too.

Delegating repetitive, time-consuming (and often mind-numbing) tasks that algorithms can do faster and more accurately than humans makes business sense, in theory. But we are hearing that this is easier said than done.

Many are keen to exploit the efficiencies that adviser tech promises to unlock for their businesses.

Indeed, as the chart below illustrates, over two thirds of firms place efficiency in the financial planning process as one of the top three drivers of their tech strategy, with over a third of firms saying it is the number-one driver. This puts it well above regulatory/compliance auditing in second place.

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Advisers favour tech that aids rather than replaces valuable face-to-face contact.

We see little demand for implementing robo-advice or client-facing tools, which could dilute high-value relationships.

A diverse market
Whether it is cashflow modelling, fact-finding, back-office or portfolio management, the ideal is to find the perfect bit of kit that works right out the box, links up to all existing systems (regardless of how obsolete these may be) and can be easily tailored to fit an individual firm’s processes. Of course, advisers know this is not easy to come by and recognise they are a diverse and difficult audience to please.

The UK market for financial advice remains relatively fragmented, consisting largely of small- and medium-sized enterprises with different business models and ways in which they deliver advice.

It is these firms that are the main clients for most of the adviser tech providers.

They buy technology off the shelf with little customisation to their own specific needs, in the attempt to balance their need for efficiency with controlling business costs.

This practice has led to a fragmented adviser tech landscape. Providers tend to create modular software, which theoretically should allow firms to adapt and customise it but, in reality, tends to be used straight out of the box.

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Whether adviser firms prefer the best-of-breed or one-stop-shop approach, both avenues often lead to systems that come with a lot of functionality that businesses do not understand or have the time to learn. Once they try to implement the systems across their practice, they are found wanting.

Paying more does not mean perfect
Pre-RDR, many advisers were more inclined to use free tech solutions from product providers. Now they are choosing to pay for solutions that will aid them in providing more robust advice and added value to their clients. But advisers do have a limited budget to spend on tech usage and improvements. Technology firms are therefore vying for pole position.

The perception is generally that each tech provider is a specialist in one area of the advice process, usually their core product, and advisers prefer to pay for the tool for which they are known.

But this results in adviser firms using a collection of specialist providers, which do not necessarily link up with each other.

The biggest bugbear
Indeed, the biggest barrier faced by advisers when using technology is integration of systems.

In our latest survey of advisers, 63 per cent put it as their main challenge – a 23 percentage point increase since last year.

And the chorus is only set to get louder as advisers feel poor integration puts pressure on their time and profitability.

Advisers want systems to talk to each other better. But most systems do not link up to others. Where they do, it is often only one-way, involving inflexible templates and procedures to make the integrations work. Advisers want tech that makes their processes more efficient; that includes re-keying data from one system into another. They say they are seeing progress but it is coming much slower than demand.

Mariam Pourshoushtari is an analyst at Platforum. For more information on Platforum’s report, Adviser Market: Fintech and Digital, contact mariam.pourshoushtari@platforum.co.uk

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There is one comment at the moment, we would love to hear your opinion too.

  1. “Indeed, the biggest barrier faced by advisers when using technology is integration of systems.” Yes, but equally annoying is the lack of development in providers systems to provide the information required in servicing clients requirements – especially when we’re told all can now be done online!

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