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.

Client portals

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.”

Technology adoption

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.

Here’s what you need to know this week: 

1. AMP could face inquiry over its treatment of financial planners – this comes after AMP has spent the last year forcing hundreds of its own financial planners out of business with many losing their homes and being left with huge debts to the company. More here.

2. Don’t forget about the kids. Teaching kids good spending and saving habits is really important but even more so, teaching them to have a good emotional relationship with money. This includes understanding how to make good decisions, bringing money discussions out into the open and not being overly influenced by advertising. More here.  

3. Cash is still king, especially during these tricky times. If you are an adviser who has typically stayed away from cashflow management for clients, right now might be an opportune time to familiarise yourself with how myprosperity can be used to help your clients manage their money. More here.

4. Adviser Innovation Summit has gone digital and it’s free – the agenda was released this week, which you can take a look at here.

5. Stay on the defence. Advisors shouldn’t be abandoning defensive assets like cash and fixed interest just because of the likelihood of a prolonged low interest rate environment.  “Defensive assets continue to have a really important role to play in retirement portfolios for a lot of Australian retirees and I have not come across a whole lot of Australian advisers who have abandoned defensive altogether,” Challenger head of technical services, Andrew Lowe said on Money Management’s Retirement Incomes webinar. “Whether it be a high rate or low rate environment, they serve a purpose.” More here.

Brad shares his insights into the changing realm of leadership through some actionable tips for managing teams remotely:

1. Retain your culture.

   Be consistent with your messaging about your trademarks, and how you are as a business and keep that alive.

2. Treat each person as an individual.

   People process messages differently, so when you put out a blanket message be mindful that you’ll get different reactions, and plan for that accordingly. 

3. Stay connected.

   Hold two connection meetings a day – one, first thing in the morning to touch base about what each person has on for the day, and another one midday or post lunch, which can have more of a social aspect that covers a quick check in to see how everyone is going. Feeling connected is extremely important, especially when you don’t have those water cooler conversations anymore.

“Businesses that have now encouraged people to find their own method for productivity have done consistently well.”

When it comes to the changes that should be embraced going forward (post COVID), he advises leaders to think about: 

1. What did you learn in terms of a hands-off leadership style?

   When employees are back in the office, stop looking over their shoulder because you’ll take away the individual meaning and purpose of their work, and make it about you. So let them have the autonomy they’ve been used to, and trust them to manage their own productivity. 

2. What did your team really enjoy about working from home?

   How can you encourage and enable them to bring elements of that back to the workplace? People have adjusted to the mind shift of working from home, and going back to working in the office will mean another mind shift that leaders could be underestimating, so there needs to be policies in place to enable a more flexible and individualised work plan. 

3. What did your clients learn to like, and how do you keep giving them what they want?

   Your clients may have increased their reliance on technology, and learned new ways of getting information which you’ve previously provided, such as through myprosperity. So what can you do to keep them enjoying that world?

Watch the full interview below. 

Configuring cashflow

Next, Karen highlights the “settings” feature in the client portal to make it nice and easy for you to filter out the “noise” in account transactions including duplicate transactions, hidden transactions, mortgage payments, transfers, etc. This is the number one query from advisers and clients when it comes to cashflow configuration. By default, the client portal is configured to remove these distractions and keep the expenses and income reporting clean, but it is up to the individual and the detail they want included. The bottom-line is, this is all customisable but it starts with knowing what you want and selecting your preferences accordingly. Rest assured, you can always go back and change it if it’s not quite right the first time around.

Setting up bank feeds

Going back into cashflow, it is important to have all bank accounts and credit cards linked in myprosperity. The setup of live data feeds is very simple and secure via the Yodlee service, and by default it will grab the last 90 days of transactions and load into the system. Note that some financial institutions enable the past 365 days of transactions to be pulled through. This is great if you want to track a client’s tax related income and expenses from the beginning of a financial year, but don’t worry if the transactions imported won’t go back to the beginning of the financial year, you have the ability to upload a CSV file to plug any missing months. Remember, you will need to have the client on a Pro subscription if you want to get the daily transaction feeds, otherwise they can upload manually via CSV. 

Creating rules

Next, you want to establish rules to automatically tag transactions as they come into the portal from the various bank accounts. If you’ve used Xero and are familiar with setting up bank rules to automatically categorise transactions then it’s the same concept here. Simply “create a rule”, and when you change the category against one specific transaction, the changes will be applied to all past and future transactions across all bank accounts. Pretty soon you will have all your expense and income categories showing you exactly where money is coming from and where it is going – the starting point for better managing your money. Did we mention setting and tracking budgets? Perhaps that’s a topic for a future webinar.

Generating reports

The last piece covered is how to generate reports from the system for the client. This is where the magic happens. Previously, if you’ve tried to help clients with cashflow using manual uploads or spreadsheets, the time taken to generate reports would have been onerous and simply not worth the effort. With myprosperity you are using up to date transaction data and since you have configured all the categories, the reports generated will use the latest information, so there is no manual data entry needed.

Well, that’s it in a nutshell, so why not give it a shot? We hope the training webinar is helpful in getting your clients setup with simple and powerful features that will help them better manage their money. 

1. Switching – Many advisers have been switching their clients onto new investment platforms new data from Investment Trends reveals. Many are also broadening the range of platforms they use. “The average planner uses 2.6 platforms each, reversing the consolidation seen in the last two years (up from 2.3 in 2018 and 2.1 in 2019)”. More here.

2. Open banking for clients – With COVID-19, market volatility and regulatory issues, advisors have had a lot to contend with, pushing open banking into the background for many. However, it’s something some advisors are already starting to leverage – linking portals with client bank accounts, super funds and insurance policies to start to figure out how they can use the technology to their benefit.  myprosperity integration partner Iress explained that this will enable advisors to have deeper client conversations regarding cashflow and goals as you can see more information in more detail. More here.

3. Open banking for practices – Open banking helps in the client onboarding phase, digitising the fact find when it comes to spending habits and on an ongoing basis you won’t need to rely on the client for updates on spending and other financial activities. More on digital fact finds here.

4. How you can help. Financial advisors can play a critical role in a client’s life, in particular you can help lower debt, raise cash, assess new investment opportunities, execute ideas or just help keep the lights on and the day-to-day operations running smoothly. More here.

5. No better time than now. New research from KPMG shows that those who  use financial advisers see them as essential.It found that more than 70% were satisfied with their financial planner – compared to 59% of respondents who were satisfied with their superannuation funds. More here.