What role can technology play in the advice process?

But much emphasis has been placed on technology’s ability to transform the advice industry, both for advisers and their clients. 

While some technology has the ability to shake up the industry and streamline the delivery of advice, it also has its limitations.

Anthony Morrow, chief executive of evestor, remarks: “Using technology in financial advice is no longer a question of should we; we need to, as it is expected. 

“It still makes me smile when I see a press article about some institution launching an app, or something, and it being heralded as groundbreaking. In most industries not having an app or a mobile channel would pretty much kill the business.”

He confirms: “It’s a necessity, not a nice to have. Finance should be no different.”

Technology is now essential through almost all of the advice process in allowing advisers to deliver accurate, up-to-date and efficient advice to their clients.Scott Gallacher

The question is, are advisers embracing technology and, if so, how are they putting it to use in their businesses?

In answer to the first question, John Diehl, senior vice president of strategic markets at Hartford Funds, believes the assumption that advisers are “anti-tech” is inaccurate.

“The key to technology is efficiency and so there are many things advisers used to do manually that now can be expedited more efficiently by the implementation of tech,” he says.

Scott Gallacher, chartered financial planner at Rowley Turton, lists: “Whether it’s risk profiling, investment analysis, researching products, producing illustrations or making applications, technology is now essential through almost all of the advice process in allowing advisers to deliver accurate, up-to-date and efficient advice to their clients.”

He observes not only are financial advisers using more technology, “but we’re also seeing more and more integration between the different parts of the advice process”.

“[This is] perhaps best illustrated by the robo-adviser propositions which, despite some limitations, will go some way towards helping to close the advice gap,” Mr Gallacher suggests.

Time to focus

The words ‘efficient’ or ‘efficiency’ are commonly used by commentators when talking about the use of technology in financial advice.

Rob Gagliardi, digital product and propositions manager at Bravura Solutions, explains: “In the past few years, technology has had a growing impact on the financial planning and advice profession, predominantly through delivering operational efficiency, automation of administrative tasks, reducing risk to advice firms and opening up a wealth of benefits to clients.”

He believes the increase in operational efficiency and the reduction in the administrative burden placed on advisers are where the impact of technology has been most keenly felt, “as it allows advisers greater time to focus on what they’re being paid to do – talk to their clients, understand their needs, wants and outcomes, and provide quality advice”.

For some, the adoption of technology by the advice industry is still in its early days. But many agree it has the capacity to ‘free up’ advisers’ time and that this is where technology holds the most value.

Tony Bray, head of business development at threesixty services, suggests it is only in the past 12 to 18 months that the industry has witnessed technology advancements with what he calls “game-changing potential”.

By this, he means, “those with the potential to change the way intermediaries interact with their clients”.

Driving force

He believes the use of technology is being partly driven by open banking regulation.

Open banking, which was set up by the Competition and Markets Authority and was introduced in January 2018, means customers and small and medium-sized businesses can share their current account information securely with other third-party providers.

Earlier this month, Bluestone Mortgages announced it was piloting an open banking service.

“Applications… which for the first time encourage clients to complete their own ‘know your client’ information, are then shared with their adviser through the secure client portal in which the technology is embedded,” he explains.

“Clients can now create their own dashboards, showing their entire wealth, coupled with detailed breakdowns of their income, expenditure, and insurance renewal dates. 

“Useful stuff – especially if the client allows their ‘trusted adviser’ to access it,” Mr Bray notes.

“An adviser can do a great deal of meaningful analysis, prior to meeting the client, with such information.”

Regulation has certainly had an impact on advisers’ use of technology, whether the regulation is open banking or GDPR.

The latter came into effect on May 25 2018, and “was a significant driver for advisers to adopt new technology to assist in staying the right side of the law”, according to a press release from Intelliflo.

Intelliflo’s executive chairman Nick Eatock cites the growth in users of its own Intelligent Office software around the time of the implementation of GDPR, despite having been available since 2015. The software allows advisers to exchange messages with clients in a secure environment. 

Mr Gagliardi adds: “Linear processes, such as a client fact-find or cash flow modelling, have become dynamic, with advisers having access to much richer data on their clients, at any time. 

“You can see initiatives like open banking only accelerating these opportunities, by enhancing the quantity of data and analytics available to advisers.”

There are areas of the industry which have been slower to adopt technology though.

Conor Murphy, chief executive of Smartr365, observes: “Technology has been widely adopted across the financial advice space, especially after the Retail Distribution Review, with most investments, reporting and client contact now driven via platforms. 

“The mortgage and protection sector is still well behind some others, but it is likely to catch up rapidly over the coming years.”

eleanor.duncan@ft.com