The benefits of digitising financial advice

In this article, we will explain how digital advice can take your financial advice practice to the next level. We also explain why digitisation is not just about copying and pasting your old manual processes to a digital format, but rather about transforming your client experience and your business model.

When we look at the client digital journey, we must look beyond the traditional semi-manual processes that we used before.

The financial services industry is going through a major shift due to the changing expectations and preferences of clients, especially after the COVID-19 pandemic. Clients are more informed, empowered, and more diverse than ever before, and they want more personalised, convenient, transparent, and engaging experiences from their financial advisers. They also use digital channels and platforms to access information and services, and they compare you with other providers, not just in your industry, but in other industries as well.

How can digitisation help?

Financial advisers need to adapt to this new reality and use digitisation to enhance their value proposition and differentiate themselves from their competitors.

Digitisation can help you to:

• Enhance client satisfaction and loyalty by providing more timely, relevant, consistent, and tailored advice, communication, and service delivery.
• Improve efficiency and productivity by automating repetitive and low-value tasks, reducing errors and costs, and freeing up time for higher-value activities.
• Increase revenue and profitability by creating new sources of income, optimising pricing strategies, and reducing client churn.
• Expand your reach and scale by leveraging digital tools and platforms to access new markets, segments, and referrals, and to offer more flexible and diverse solutions.

Where am I at in the journey?

This is a framework for assessing your current level of digitisation and identifying the gaps and opportunities for improvement.

The framework consists of four dimensions:

• Client engagement – how well you interact with your clients across the entire client journey, from acquisition to retention.
• Advice delivery – how well you deliver your core value proposition of providing quality advice that meets the needs and goals of your clients.
• Business operations – how well you manage your internal processes, systems, and resources to support your advice delivery and client engagement.
• Business model – how well you align your revenue streams, pricing strategies, and cost structures with your value proposition and market positioning.

How do I move forward?

This is a roadmap for implementing digitisation initiatives across these four dimensions, based on three stages:

• Foundation – setting up the basic digital capabilities and infrastructure that enable you to operate effectively in the digital environment.
• Differentiation – enhancing the digital capabilities and infrastructure that enable you to create a distinctive value proposition and client experience.
• Transformation – reimagining the digital capabilities and infrastructure that enable you to disrupt the market and create new sources of competitive advantage.

What does it mean for an Australian financial adviser?

Digitisation addresses some of the key concerns facing Australian financial advisers:

• The rapid evolution of technology that creates both opportunities and threats for you who need to keep up with the changing client expectations and preferences.
• The rising regulatory pressure and compliance burden that require you to demonstrate your professionalism, ethics, and quality of advice.
• The increasing demand for personalised, holistic, and goal-based advice from clients who have different backgrounds, needs, preferences, and values.
• The growing competition from new entrants, such as robo-advisers, fintechs, big tech and the re-emergence of vertical integration, which offer low-cost, convenient, and scalable alternatives to traditional advice models.

Digitisation is not only a necessity but also an opportunity for you to improve your performance, efficiency, and competitiveness.

Digitisation can help you to:

• Comply with the professional standards for financial advisers in Australia and reduce professional indemnity costs.
• Enhance your reputation and credibility as a member of the Financial Advice Association Australia (FAAA), which is Australia’s leading professional association for the financial advice profession, and as a Certified Financial Planner professional.
• Deliver better outcomes for your clients by providing them with more comprehensive, integrated and tailored advice that covers their financial, lifestyle and wellbeing goals, and by engaging them in a more interactive, transparent and collaborative way.
• Grow your business by reaching out to new segments and niches, such as younger, female, multicultural and socially conscious clients who are underserved by the traditional advice models and by leveraging referrals, testimonials, and reviews from your existing clients.
• Increase your income and profitability by offering more value-added services, such as coaching, education, behavioural finance, estate planning etc and by optimising your pricing strategies based on the value you deliver to your clients.

Why digitisation is not just about digitising the old manual process

We recognise that digitisation is not a simple or straightforward process. It requires a strategic vision, a cultural change, and a continuous innovation mindset. Digitisation is not just about digitising the old manual processes, but rather about transforming your client experience and your business model.

Digitising the old manual process means doing the same things you used to do before, but in a digital way. For example, digitising the old manual process could mean:

• Using an online form or questionnaire to collect client information, instead of a paper-based one.
• Sending an email or a text message to communicate with clients, instead of a phone call or a face-to-face meeting.
• Providing a PDF document or a video presentation to deliver advice to clients, instead of a printed report or a slide show.

While digitising the old manual process can bring some benefits, such as reducing paper usage, saving time, and increasing convenience, it can also create some drawbacks, such as:

• Losing the human touch and the personal connection with clients, which are essential for building trust and rapport.
• Missing the opportunity to add value and differentiate from competitors, who may offer similar or better digital solutions.
• Failing to meet the changing needs and expectations of clients, who may demand more personalised, engaging and interactive experiences.

Therefore, digitisation is not just about digitising the old manual process. It is about transforming your client experience and your business model.

Transforming your client experience and your business model means doing things differently or doing different things in the digital environment. For example, transforming your client experience and your business model could mean:

• Using artificial intelligence (AI) or machine learning (ML) to analyse client data, generate insights and provide recommendations.
• Using gamification or behavioural nudges to motivate clients to act and achieve their goals.
• Using social media or online communities to engage clients in peer-to-peer learning and sharing.
• Using blockchain or smart contracts to facilitate transactions and agreements.
• Using subscription models to charge clients based on the value they receive.

By transforming your client experience and your business model, you can:

• Enhance the human touch and the personal connection with clients by using digital tools to augment your capabilities and complement your skills.
• Create new value and differentiate from competitors by offering unique and innovative solutions that solve client problems and meet client goals.
• Meet and exceed the changing needs and expectations of clients by providing more personalised, engaging, and interactive experiences.

Conclusion

We have shown you why digitisation is not only a necessity but also an opportunity for you to improve your performance, efficiency, and competitiveness. We also explain why digitisation is not just about digitising the old manual processes, but rather about transforming your client experience and your business model.

Benjamin Walsh, head of research, Padua Solutions