What does the tech-enabled advice firm of the future look like?

Advisers who are committed to growing their client base and closing the advice gap are constantly on the lookout for ways to improve their businesses efficiency. But what are the paths for advisers eager to drive this efficiency? Technology has the potential to contribute significantly: improved efficiencies between existing tech products could eliminate rekeying inefficiencies and if advisers are willing to get closer to the design and build of products, they could ensure that new products better serve their clients and business model.  

On 11 May 2023, FE fundinfo hosted around 70 financial advisers in London to discuss the ways in which technology could change the advice process in the future. The conversation focused on the value of integrations between various tech products, as well as the implications of hybrid advice, and moved on to cover the implications of being a product manufacturer and what the future for white-labelled platforms looks like.

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What does the future hold for financial advisers?

Tom Cheesewright, an Applied Futurist, who works with brands such as NASA, Google, Ford and Pepsi to help them see the future, opened the event with a keynote speech on the next 20 years of societal development and what impact this may have on the financial advice industry. Tom outlined that there are challenges ahead, but also opportunities for advice firms to utilise advances in technology to aid their businesses. Advisers should  be considering how the coming generations will differ from their parents: how this impacts what they need from advisers and what opportunities will be presented by changes to the world of finance and business.

One-stop shop vs best of breed tech - why can't advisers have both?

To overcome these challenges, advisers are expecting to look to tech and the growth of AI to enhance their services. In the first panel session, One-stop shop vs best of breed tech – why can’t I have both? Colette Noble, Director of Strategy at LIFT-Financial Group, explained that, to prioritise business efficiencies, LIFT-Financial Group have a strong preference for tech products that offer off the shelf integrations with their existing software. Indeed, products that already have integrations with  back-office system are preferred in the procurement process, even if they require existing business processes to be altered. Tim Sargisson, previously of Sandringham Partners, agreed that any additional solutions must integrate fully with the core technology that a business is built on. But of course, if integrated tech is to support advisers needs into the future, software vendors must work together to facilitate integrations with other providers  as explained by Nick Eatock, CEO of intelliflo. 

How can integrations help advisers?

The potential efficiency gains that integrations can bring advisers is extraordinary. Steve Mitchell, Head of Adviser Product Strategy at FE fundinfo, explained the opportunities for this. Integrations between technology products for advisers – such as FE fundinfo’s investment research and cashflow planning tools, FE Analytics and FE CashCalc – can vastly improve business efficiencies for financial advisers. While individually these efficiency gains may be quite small, by drawing parallels to British Cycling’s ‘marginal gains’ theory, Steve explored the incredible potential for improvement when many small efficiencies are applied to different points in the process. For example, by the one act of integrating their back-office provider with FE CashCalc, advisers can reduce manual re-keying of data, with Steve suggesting that £72.5M worth of adviser time could be saved each year. With this time saved, advisers will be able to serve more clients who currently cannot access financial advice. 

Should advisers be involved in manufacturing tech products?

Since advisers are close to their clients, especially where they engage with the substantial data they control, advisers can add significant value when involved in the manufacture of financial products and services. If products are better able to meet the needs of advisers and their clients, advisers will be able to better serve more clients which could contribute towards closing the advice gap. 

What about advisers and platforms?

Moreover, advisers are increasingly able to influence additional parts of the value chain. This includes white-labelled platforms. The final panel, David Ferguson, CEO - Seccl, and Noel Butwell, CEO – abrdn Adviser, hosted by Alan Easter, Managing Director - 2ndWeek, agreed that the rise of platforms helped open the advice industry for greater transparency and competition. However, there is a little more debate as to which party in the value chain the platform management should sit with. While Noel argued that the resources, specialism and trust in incumbent platform managers makes them best placed to handle the responsibility, David pointed out that shouldering the responsibility of suitability meant advice firms should be more involved in platform management – and that we shouldn’t take for granted that it sits with 'shonky asset managers'. 

How can my advice firm take the opportunities of the future?

Advisers, then, have a few opportunities available to increase the capacity of their businesses through the application of technology to drive efficiency. While they may be hesitant about becoming more actively involved in the creation of products, they should definitely be looking to integrate their tech stack to serve more clients and close the advice gap. To support them, technology providers need to make these integrations possible wherever they can. However, if advisers do understand the greater responsibility they hold when becoming a manufacturer, and choose to take this on, they are well positioned to add significant value to the industry.