Netwealth’s latest report, 2024 AdviceTech, found that the top technology-adopting advice firms are spending 10.7 per cent of their revenue on technology per annum, meanwhile, almost half (49 per cent) of these firms indicated they will definitely invest more in the next financial year.
These “AdviceTech Stars”, as named by Netwealth, are firms that are strategically leveraging both emerging and existing technologies to drive business transformation and a competitive advantage. Of the 350 firms surveyed by Netwealth, Stars make up just 23 per cent.
Meanwhile, AdviceTech Adopters, those less advanced in their adoption of technology, are spending slightly less, 9.6 per cent, with one in four (26 per cent) intending to increase their spending. Meanwhile, technology-conservative firms are spending just 6.4 per cent of their revenue on tech and only 15 per cent intend to spend more.
The report further noted that 43 per cent of Stars have a dedicated in-house technology manager, and 39 per cent have an annual budget for technology spending.
Despite the considerable resources Stars are committing to technology, Netwealth found that four in five (81 per cent) reported more than $1 million in revenue for the year ending 30 June 2024.
How are Stars using technology?
According to Netwealth’s report, the most common focus for Stars in their technology strategy is improving efficiency, with 82 per cent of firms indicating doing so.
This is closely followed by improving their data capabilities or better integrating their IT systems (80 per cent) and improving client satisfaction and engagement and the quality of advice (70 per cent).
Furthermore, 65 per cent of Star firms said they are prioritising strengthening their IT security and client data, with 61 per cent taking advantage of emerging technologies like AI.
The report also found that seven in 10 AdviceTech Stars were using or piloting the use of AI in their firms. Among these firms, the most common use was for summarising client meetings (64 per cent), content marketing (43 per cent), and back-office automation (43 per cent).
Almost a third (30 per cent) also reported use as part of their client review process, while one in five (21 per cent) used AI to help in the preparation of the financial plan or statements of advice.
When it comes to Star firms’ technology strategy, the report found that 82 per cent aligned their digital and technology strategy with their overall business strategy, and more than half (53 per cent) equated “business success to digital success”.
“This seems obvious, but for some, it’s often easy to get sucked into the latest ‘shiny new toy’ or technology without it having a true business purpose,” the report said.
