There are many articles and opinion pieces that highlight how technology can bring about efficiency and scale and improve the adviser’s client experience. Every year wraps and platforms are rated based on whether they offer certain features or not, with the race for new functions between the incumbents now a well-trodden path. Yet with all these features in the market, there is still a gap in the move to efficiencies and solutions in the adviser practice.
For true efficiency advisers need to look beyond past practices. They should no longer be buying products and services for their features, they should seek experiences, for their clients and their staff that are delivered via services.
Take for example the implementation of asset recommendations. A feature would be the ability to generate the record of advice (ROA). An experience would be the ability to generate many ROAs in bulk, authorise their release to the clients for electronic sign off, and knowledge that only upon their authorisation, which is stored for compliance, are the recommendations executed to market (without any adviser effort to do so).
This is one of many examples in the advice value chain that through an experience-based solution, can significantly reduce both administration burden and costs, and reduce the implementation time frames, reducing risk in stressed market conditions as well as ensuring compliance and audit.
In a past world of higher margins and less regulation and compliance, using one system for one feature and another for the next step in the process, with human capital to connect the dots, would have been an accepted status quo. Times have now changed and margin pressures are real.
There are two channels available to the adviser practice to help improve those margins, namely increasing the efficiency of the practice, which can also enable growth; and margin recovery from the product providers by moving to naked pricing and lower cost solutions to deliver the advice.
It is in the selection by advisers of partner solutions, who deliver an end to end experience for the adviser and their staff, that the efficiency gains can be realised. Importantly, the chosen solution also needs to integrate both data as well as desired experience outcomes with other solutions in the value chain. Take for example a financial planning firm that also offers accounting services. The solution that the planner chooses should not detract from the accountant’s solution and end clients’ experience. For example, if the planner uses a managed account solution and that solution does not cater for minimum trade parcel, then the accounting service has increased workload and complexity in accounting for additional small parcels of trades.
Hence in choosing the right partner solutions, the adviser has the right to expect an end-to-end experience, not just a set of features. And it is on this measure that the industry needs to change its approach in partner selection.
Shannon Bernasconi, managing director, WealthO2
Shannon seems to have forgotten that an ROA is a record of advice and the best interests duty and related obligations apply. As such there is a requirement to ensure that the client’s relevant personal circumstances haven’t changed, undertake product research to ensure that the existing and proposed products meet the client’s goals and objectives, that the advice is appropriate etc etc etc. An ROA in isolation does not meet BID safe harbour, appropriate advice and related obligations. The RoA is the easy bit, even with replace advice, it is the rest of the advice process that leads to an RoA that needs substantial efficiency gains