These days, it seems that any talk of the technology industry conjures images of a sea of green across the technology indexes with the massive uptake of technology since the pandemic hit. Taking a more grounded approach however, I noted the release of Netwealth’s annual AdviceTech report last week, which unlike previous years was not accompanied by a packed conference room with keynote presentations and networking drinks. Remember those days? In any case, the report makes for a really insightful read, whether you are a technology provider or advice firm.
Virtual online meeting tools
Interestingly, the surveying of 300 advice firms that forms the basis of the report findings, was conducted back in March 2020, so right at the start of the pandemic. As a result, the findings could not reflect what I would expect now to have been a breakneck acceleration in the adoption of a whole range of technology platforms. As an example, Virtual Online Meeting Tools reflected only 45.7% usage amongst survey respondents, with an expectation that by 2022 it will be around 80%. My guess is that just 4 months after the survey was conducted that number could now be higher than 90%.
As you would expect in the midst of a pandemic where face-to-face interaction is very limited, client expectations will have shifted rapidly to advisers that use technology to enable more convenient and virtual interactions. We saw through our own myprosperity@home series, across dozens of interviews with advisers, how COVID-19 has accelerated the use of digital platforms to enable this type of remote interaction. Truth be known, this was happening well before the pandemic struck. You only have to look at the table of technology categories on page 5 of the report to see the extent of investment that has taken place across the industry to see that we are becoming a much more tech-led industry.
Closer to home for myprosperity, we get a mention as a leading supplier in 3 of the technology categories, Client Portal and all the associated features that go with it remains a huge focus and opportunity for the advice industry. Among the list of must-have features includes the provision of a household balance sheet; ability to update personal information; auto generated reports; budgeting/cashflow; document vault and more recently, digital fact finding tools. There are many more capabilities covered in the report and most have been a big focus for myprosperitys’ evolving platform. What was also worth noting was the conclusion that the industry is still not reaping the benefits of Client Portal platforms. “Client portals are a doorway to improved client communication, collaboration and engagement, and improved business efficiency. But the main benefits of portals are “expected” rather than “realised.”
What I really like about the report is the analysis they have done to show the correlation between business success and technology adoption. This year they developed a Business Success score based on quantifiable data, such as FUA and revenue growth/decline and married that with a Technology Adoption Score. No surprises that the data presented in this manner shows clearly that the more successful advice firms from a business standpoint are the ones that also achieved a high technology adoption score. Much of this is again being driven by the expectations of clients.
While not explicitly spelled out in the report, the motivations for the adoption of technology by the leading advice firms generally fall into 3 buckets. 1) Improved client engagement/satisfaction 2) Increased practice efficiency and 3) Growing revenue. Equally insightful, and something for all the technology providers to consider and improve on, are the observations around barriers that stand in the way of firms implementing technology within their businesses. In particular “don’t have time to understand and explore the options”; “takes too long to implement” and “don’t have the processes in place within our business”, are all key factors preventing advice firms from adopting technology. Other barriers are perhaps more excuses or reflective of a lack of conviction or planning when it comes to making tech investments. Factors such as “too many choices”; “don’t know where to start”; “don’t have confidence in making tech decisions”, or “don’t have the resources” are easily overcome with the right level of planning and commitment, and in my mind what separates the “Stars” from the “Laggards”.
Sky’s the limit
So why do the “Stars” get it right? No surprises, the advice firms that succeed when it comes to technology adoption think carefully about how they invest in tech. According to the report, 43% of the Stars plan their investment with a technology roadmap and quite a number of them will have an in-house tech manager or product champion who is responsible for the project’s success. This is very similar to what I saw in my days at Xero when technology transformed the accounting industry. In my mind, those firms that are prepared to commit to change, invest the time, and approach technology as a change management exercise, are the ones that ultimately thrive.