The financial advice world will have to adopt technology quickly – especially to implement the Financial Conduct Authority’s (FCA) Consumer Duty.
In a bid to bolster offerings in the market, SimplyBiz parent company Fintel recently invested in fintech company Plannr Technologies through its early-stage technology incubator Fintel Labs.
Plannr provides specialist CRM capability for financial advisers, planners and wealth managers, allowing them to store customer data, create workflows, conduct financial planning, undertake cash-flow analysis, create suitability reports and publish to a customer portal.
As technology in the adviser world continues to evolve, International Adviser spoke with Matt Timmins, joint chief executive at Fintel, about his views on the progress of adviser tech.
Is adviser tech making enough progress?
Looking at adviser tech progress to date, Timmins says it is comparatively slow and that many processes are still manual.
“Technology in financial services has historically tended to move a little more slowly than in some other sectors,” Timmins said. “The delivery of high-quality personal financial advice is complex and, when you look at some of the processes in place – on either a large or small scale − they’re still very manual.
“There are still a great deal of steps in a lot of advisory workflow, and more steps creates friction, which leads to a higher propensity for errors to occur.
“In recent years, Fintel has made significant investment into the development of advice tech (financial planning technology and workflow) and regtech (building regulation and compliance into workflow) with an aim of providing better outcomes for advisers, consumers and the retail financial services sector as a whole.
“We are confident that the progress we are making is of a significant enough velocity to catch up with the advances made by other sectors. There are many new high tech entrants coming into the market and bringing with them learning from other sectors.
“The current issue isn’t necessarily the quality of technology in our market, but the number of individual systems and the lack of effective collaboration and integration. Our belief is that for technology to work for advisers and consumers in the way that is most beneficial, we need fewer, more complete, solutions that are capable of adding value to the entire advice process. That is what we are building.
“The majority of this will be proprietary but there will inevitably be areas where we want to build deep integrations with other third parties. Collaboration is key to the future success of our sector. Something I’ve personally experienced, and which never fails to impress me, is the eagerness with which advisers engage with – and demand – evolution in technology.”
The right tech needs to be available
The old age debate is whether IFAs will actually adopt tech and continue with their legacy systems.
But Timmins said that advisers are very much in favour of adopting tech and it’s vital that they get the tech they need.
He added: “I’ve worked in financial services for over 25 years, and – based on my experience – you’d struggle to find an adviser who didn’t understand the benefits of adopting technology.
“Where there is resistance, I’ve found that it often comes from the frustration of advisers encountering technology which requires them to compromise their processes to fit with it, rather than the tech being built to complement what is already working for advisers.
“Additionally, there’s historically been a plethora of systems which work well individually but haven’t been designed to fit together to operate smoothly end-to-end.
“We often talk about the regulatory burden upon the shoulders of advisers, and, in all honesty, I don’t believe that’s going to change. It concerns me when technology is discussed in a way which suggests that it adds to the pressures facing advisers.
“When the right solutions are in place, it should relieve a lot of the heavy lifting which can prevent advisers from spending time with clients. It’s vital that advice firms adopt tech, but it’s equally vital that we ensure the right tech is available to them.”
Key role in Consumer Duty implementation
Advice firms do not have much time left to deal with the Consumer Duty – but according to Timmins, technology is at the heart of effective implementation of the regulation.
He said: “When the final guidance was released last July, advisers will already have been on a broad spectrum of readiness for each of the elements addressed by Consumer Duty, such as working with clients with vulnerable characteristics, and rationalising price and value.
“However, I believe that the vast majority of advisers will have not been prepared for reporting on all of these elements in the way the regulator now requires, and that’s where tech is needed. Consumer Duty requires a cultural shift in advisory firms, but it also demands that the results of this shift are evidenced in a way which would be virtually impossible without the use of technology.”
Future of advice tech
Looking towards the future, platform style solutions are the way forward for advice tech, says Timmins.
“In my opinion, the future of advice tech centres around the provision of a platform-style model – not a trading platform, but a platform of tech and services that also includes trading functionality.
“It is unlikely that there will be one system which does it all, but I do believe, through deep integrations and collaboration, we can move to a platform-style solution that has a small number of well-connected solutions which align to advice process and deliver better outcomes.
“AI has a part in the future of the advice tech world, but I don’t think we have figured out where, how and to what degree just yet.
“My prediction is that AI will form part of future RegTech solutions, flagging areas of the advice process that need a second review and appraising advice cases in real time. AI will also play a part in helping advisers optimise solutions for clients and understand gaps in clients’ needs.
“It is also likely that AI will be able to power a complete advice journey over time, so advisers in the future will need to be really clear about the areas where they will add value, compared to the AI solutions that will exist in just a few years’ time.”
