IFAFeb 16 2023

Legacy tech, culture and skill shortages holding IFAs back

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Legacy tech, culture and skill shortages holding IFAs back
AdviceBridge chief commercial officer Bruce Ely-Johnston said advice firms could wake up to firms like Amazon or Apple 'assaulting their business'
ByRuby Hinchliffe

Ageing technology, stubborn culture and a lack of data literacy are all preventing advice firms from growing their businesses in the modern day.

This is according to AdviceBridge, whose chief commercial officer Bruce Ely-Johnston said he sees “many firms” using technology believing they have a good system, only for his firm to show them how antiquated it really is.

The company, which helps financial planners automate their services, found that firms prioritise updating or changing their existing systems, client onboarding, improving the digital services on top of their tech stack, client suitability and streamlining compliance.

Not only will firms be challenged by their peers, but they could also wake up to firms like Amazon or Apple assaulting their business.Bruce Ely-Johnston, AdviceBridge

But Ely-Johnston said many of these priorities fall short of their potential due to three overriding “significant” barriers.

These are legacy technology, the need for culture change, and a lack of skill sets - particularly around data - in advice firms.

“One of the big issues for firms is the small number of large providers dominating the space, which is compounded by advisers’ lack of engagement with smaller providers which can provide much needed improvements,” he said.

Larger providers such as Dynamic Planner have now taken their offerings abroad, while established platforms among advisers like 7IM have been investing in retirement services which bleed into financial planning automation.

“As firms have grown over the first 20 years of this century, they have acquired different systems for various different functions,” said Ely-Johnston.

“These have predominantly been based on ‘old’ technology and hence most of the firms’ tech stacks are clunky, leading to a multitude of issues.” 

One issue which the commercial boss said is well documented is having various systems that are not well integrated, making the process of using each system very long-winded.

“Although most will have adopted tech that, at the time, improved how quickly a task or process was completed - over a purely manual process, for example - these solutions aren’t nearly as effective as more modern pieces of technology,” he said.

With the process of onboarding a new client typically taking between 25 and 35 hours, Ely-Johnston reckons the underlying systems and processes used by the majority of firms are making it more time-consuming for them to complete their work, making them less profitable and curtailing their business growth.

A stubborn culture

Last month, Jamie Jenkins, director of policy at Royal London, told FTAdviser the incoming consumer duty is more than a box ticking exercise and should be viewed by firms as a complete culture shift.