Technology providers have warned advisers are “missing out” on the full benefits of the systems they already use, with firms using less than a quarter of features available to them.
According to NextWealth’s Adviser Tech Stack report published today (March 21), software systems are “grossly underutilised” and adviser tech providers say they “struggle” to get users to fully adopt, understand and embed their systems into the advice process.
Heather Hopkins, chief executive of NextWealth, said: “Adoption of new technology is a challenge. Advice tech providers tell us that less than a quarter of the functionality available is used. Advisers tell us that a lack of time to learn to use technology effectively is one of the biggest barriers to adoption.”
The report suggested time - or a lack of it - is the biggest barrier (45 per cent) to adopting new tech among financial advisers. They also cited a lack of good solutions for firms of their size (39 per cent), and a lack of demand from clients for tech-enabled advice (27 per cent).
Last year, NextWealth also reported one in five financial advice firms has an employee dedicated to IT, suggesting a lack of resources assigned to software adoption across the industry.
No financial advice firm with 20 or fewer employees had a member of staff dedicated to IT, while of the firms with more than £500mn in assets, more than half employ a dedicated person to IT.
In NextWealth’s latest report, ‘integration with other systems' was rated ‘very important' by 60 per cent of advisers it spoke to, suggesting providers need to address their own role in the “grossly underutilised” advice software market.
There’s a reluctance among advisers to commit to tech and become too wedded to it.Pete ChadbornThis was a more important consideration in larger firms. Three quarters of advisers in businesses with £250mn in assets under advice said integrations were ‘very important'.
These sorts of firms were also most interested in a ‘fully integrated risk profiler, cash flow modelling and investment mapping tool’ with client reporting dependent on external back-office integration. Some 87 per cent of larger firms were ‘somewhat' or ‘very interested' in this proposition.
“Too often we hear that adviser tech solutions, back-office systems in particular, are cumbersome and difficult to navigate,” said Hopkins.
“Tech must be user friendly to be adopted and training and support must be top-notch."
Pete Chadborn, an IFA at Plan Money, told FTAdviser a lack of compatibility with various technology providers is the biggest reason why advice firms are reluctant to bet on one firm’s services.
“Advisers use lots of different platforms and systems for customer relationship management, compliance monitoring, CPD recording, etc,” he explained.
“In isolation, there’s some fantastic tech out there. But too much of it doesn’t talk. There’s a reluctance among advisers to commit to tech and become too wedded to it for it then to become a barrier later down the line in terms of integration.
“With back-office systems, most advisers use half of their capability at best. Because if you become too wedded to it and someone else brings out a better cash flow modelling or fact find tool, you’re suddenly restricted.”
Even if you’re not contractually locked in, Chadborn said the time taken to make a process work is then wasted if a firm has to switch to a new tool.
NextWealth conducted 100 adviser interviews and 18 interviews with adviser technology providers.
ruby.hinchliffe@ft.com
