Elemnta’s latest report, A Fractured Foundation, argued that many of advisers’ data challenges are due to having so many pieces of technology that are unable to share information between themselves, resulting in additional labour and time spent inputting the same data across multiple platforms.
“Australia’s beleaguered army of financial advice practitioners play a constant coalface struggle to plug data gaps, armed with inefficient legacy sources, platforms and tech, operating tech stacks that keep piling ever higher, all with little impact to resolve the root cause: zero genuine data interoperability,” Elemnta chief executive Shaun Green said.
“Seamless, efficient data integration is the fix.”
In order to resolve this, the report suggested the need for an integration platform or “middleware” that uses a universal data model to translate data from one platform to be used on another, meaning advisers would only have to input data once and the integration platform would then do the work to upload it onto their other platforms.
While the advice technology sector has largely relied on surface-level fixes, the report argued that this has only served to distract from the “crumbling base beneath”.
“This is further compounded by a premature fervour around emerging technologies, which, in our view, are neither practical nor aligned to the specific real-world challenges that advisers encounter daily. Meanwhile, the systemic issues of data integration and fragmentation continues to fester,” the report said.
“Just as one must learn to walk before they can run, the industry cannot unlock the full potential of emerging technologies without first establishing a solid foundational base.”
According to the report, advisers in the past spent approximately 65 per cent of their time producing advice and 35 per cent implementing it; however, advisers are now spending just 43 per cent of their time producing advice and 57 per cent on product implementation and reporting administration.
One of the most pressing issues for advisers in recent years is the lack of capacity to take on new clients, largely due to time shortages; however, the report suggested that the implementation of a “middleware” solution could free up time for advisers.
“This approach effectively centralises all of the complexity and translation required within a data platform and avoids the need for all industry systems/participants to incur the change effort, time to implement, cost and risk – as is the case with top-down mandated standards,” the report said.
The report explained that this infrastructure will not only provide relief for advisers, but it will also help reduce the cost to provide advice with the flow-on benefit of improving the affordability of advice.
“The future of the industry depends on the commercial prioritisation of a strong data infrastructure foundation that supports growth, innovation, and improved service delivery,” the report said.
“More importantly, it directly addresses one of the most pressing challenges of our time: the accessibility and affordability of quality financial advice. A ‘middleware’ solution bridges this gap, creating efficiencies in the core advice and delivery processes, ultimately helping the industry reverse the gaps of access and affordability.”
Furthermore, the report argued that this would also “open the opportunity for emerging technology providers to bring further value to the industry”.
