In a first for the profession, the FPA has recently released the FPA Fintech Report - Mapping Fintech to the Financial Planning Process - which matches fintech solutions to the financial planning advice process.

 In what is the first of its kind for the financial planning profession, the FPA has released a new fintech report that specifically plots and matches fintech solutions available in Australia to the financial planning advice process.

Speaking to Money & Life, FPA Head of Policy, Ben Marshan CFP^® says there were three reasons that motivated the FPA to undertake the research and analysis for the report:

1. increasing costs and regulatory change will add additional costs to the advice process;
2. encourage planners to carefully consider the cost of their advice process; and
3. break down the fear and confusion surrounding fintech solutions.

“The FPA Fintech Report took us about five months to complete, starting in June and finishing in November 2017,” Marshan says.

“We really wanted to dispel many of the myths and fears surrounding fintechs, while encouraging planners to think about the increasing costs of delivering advice and the role fintechs and technology can play in assisting them with streamlining their costs and the operational efficiency of their businesses.

“This includes the potential to enhance the client experience and create greater efficiencies in client relationship management.”

The comprehensive report, titled ‘Mapping Fintech to the Financial Planning Process: Why Fintech is not a Threat’, shows that through the appropriate adoption of fintech solutions, planners can achieve greater revenue generation, reduce client costs, and cater for more clients with differing levels of advice needs and engagement requirements.

Significantly, the report maps fintech solutions to the six step financial planning process:

1. establishing the scope of engagement;
2. identifying goals and financial issues;
3. assessing the financial situation;
4. preparing the financial plan;
5. implementing recommendations; and
6. reviewing and revising.

By undertaking this process, the FPA has been able to clarify the relevance and effectiveness of fintech solutions for the financial planning process. The result is a sub set of Australian fintech companies that can then be assessed by planners and advice practices to determine which solutions fit into their business objectives for engaging with their target market.

Commenting on the report, FPA chief executive officer, Dante De Gori CFP^® says planners should look at how fintechs can help them innovate their services and enhance the process of advice delivery to transform their business.

“Fintech tools have been available to planners for some time, but to a degree, have been ignored. This is due to a combination of factors, including confusion about the fintech landscape and the speed of change in technology.”

However, De Gori believes fintechs present a real opportunity for the profession.

“Until now, what has been lacking is a thorough understanding of the solutions on offer to planners, licensees and the wider profession, in terms of how fintech technologies work, and whether or not these solutions can actually deliver on their promises.”

According to De Gori, the research undertaken in the FPA Fintech Report cuts through this uncertainty and delivers key information on which fintechs can help planners to make their businesses more efficient, more engaging and more sustainable in an environment of increasing costs and regulatory obligations.

Fintech universe

The report uncovered that at any one time, there are approximately 400 fintech companies operating in Australia in varying stages of their life cycle. So, by mapping these companies to the six step planning process, the FPA has been able to provide planners with a map to technology solutions that do not create new processes but instead, streamline and enhance the delivery of advice.

Of these 400 companies, the FPA used a robust research process to identify 63 fintechs that provide assistance to planners in the delivery of the advice process, including those companies that claim to provide solutions across multiple steps of the planning process. Table 1 identifies these companies, which are mapped to the financial planning process.

Table 1: Planner technology 

Interestingly, when it comes to offering diversity of functionality in the financial planning process, the FPA research found that YTML came out on top as an end-to-end financial planning and technology solutions provider.

The report found that YTML’s functionality assists planners manage workflow, create and manage websites, and converts excel and PDF into web-based forms for engagement efficiency, all with the aim of enhancing planner engagement and improving efficiencies.

Following are some of the other key report findings around engagement, time savings and integration.

Engagement

In terms of planner engagement, the fintech solutions that stood out included Astute Wheel, Capital Preferences, My Prosperity, Presagen and Prospera.

The report’s findings recommend Presagen as a company to watch. While still in development, it is working on applying artificial intelligence to parts of the engagement process that require human reasoning and decision-making.

The report’s findings reveal that when technology solutions are utilised to their capacity and when integrated with other financial planning tools and processes already in use, they can deliver considerable compliance, engagement and process efficiencies for planning businesses. It’s these areas, according to the FPA’s research, that are top of mind for planners.

Time savings

Over 60 per cent of fintechs surveyed claimed to provide time savings of more than three hours per client.

For example, Fincast says its applications are designed to help planners be more efficient in constructing goals-based planning solutions and increase client engagement.

While MoneySoft, used by over 4,000 planners, provides a system that enables planners to identify gaps within their assessment of a client’s financial situation. The system is claimed by MoneySoft to save over three hours per client in the planning process.

Integration

When it comes to the integration of planning software, XPlan remains the product of choice by the majority of planners. However, the report found that most fintechs are agnostic. The fact that these modern technologies are built with open architecture means they can connect and integrate with any CRM system willing to do the same.

More recently, IRESS has become more open in its architecture, enabling third party providers to ‘plug in’. This allows planners to access these resources via XPlan.

Newer CRMs have been built on very open platforms that allow easy connectivity between applications, providing planners with a simple way of integrating their software.

Why adopt fintech?

The FPA Fintech Report identified over 50 fintech solutions that have a role to play in some aspect of the financial planning process, with at least 30 of these able to be embedded in a planner’s website or be white labelled.

According to the report’s findings, while process matters, engagement and connection to the planner is a key element to the enhancement of the planning process, as viewed from the client. And not to be forgotten, significant cost and time savings can be made by using the right fintech solution, ranging between $1,000 and $3,000 per client and from one to three hours per client.

Commenting on the report’s findings, Marshan says what stood out for him was the fact there were not too many fintechs trying to compete directly with financial planning businesses.

“The aim of this report was to start a conversation around fintechs and technology, and how financial planners can use these technologies to enhance the overall financial planning process. I believe the FPA Fintech Report is a good starting point to create that conversation.”

It’s a view supported by De Gori: “While some may see fintech as a threat, we believe it presents financial planners with an exceptional technological opportunity to engage clients in new ways, and achieve significant operational efficiencies when workflow processes are housed and automated within a CRM system.

“So, technology solutions, when integrated with other planning tools and processes, can deliver significant compliance, engagement and process efficiencies to a planning business, and that’s something planners need to consider.”

As such, the FPA believes the profession needs to take greater interest in, and assessment of, fintech solutions, particularly as other online offerings, like Facebook, Google and Amazon, seek to compete for the engagement and interaction with Australians.

More to come

Speaking to Money & Life, Marshan says the FPA Fintech Report is the first in a series of fintech-related projects the FPA will be undertaking. Other projects on the horizon include:

• Quantifying the time and cost for providing advice; and
• How to be an informed and knowledgeable buyer of technology solutions.

“In addition, the FPA will be releasing a range of tools and resources to enable planners to do their due diligence with fintechs before committing to their services,” Marshan says. “These are currently being developed, so watch this space.”

However, whilst the FPA Fintech Report showcases fintech tools that have been approved for use within advice networks, the FPA emphasises it does not endorse any fintech operator or technology outlined in the report.

“Instead, the FPA encourages FPA members to review the fintech solutions featured in the report, to better understand how the latest technology can fit into their existing businesses processes, enhance client engagement, and deliver greater value to current and future clients,” says Marshan.

The full FPA Fintech Report is available here.

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Making sense

Four reasons why an appropriate fintech solution implemented into the financial planning process makes sense.

1. Creating efficiencies in the financial planning process can allow a planner to reduce their costs, which will mean more Australians are able to access and afford financial planning advice.
2. Creating efficiencies can allow a financial planner to spend more time engaging with existing clients.
3. Transforming business processes allows for true scale to be built around marketing, engagement and implementation. This means that a financial planner’s time can be predominantly spent in front of clients in the role of educator and behaviour change consultant.
4. Communication structures and processes that illustrate the value and relevance of financial planning, allows greater reach and conversion of more people toward a financial planning relationship.

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6 challenges of fintech

1. The rapid advancement in algorithmic management of client portfolios drawing data and making calculations across all asset classes, means the concept of a planner being an ‘investment manager’ using static post-dated research has a very limited shelf life. Portfolio construction and constant monitoring can now all be accessed online without any human intervention.
2. The answer to this is for planners to do what algorithms can’t do – have deep and powerful conversations around client goals and objectives, and provide insights into how these goals line up. Story telling around goals has been and remains fundamental to the planner and client relationship.
3. Adapting automated advice (robo advice) concepts to existing planning businesses to cater for different client segments. By doing so, planners can utilise technology to enhance their processes, not detract from them or replace them.
4. Understanding, assessing and mitigating risks with any technology and particularly, data security. Through the use of apps, mobile sign-in to client portals and the use of smart devices to engage with clients, today’s mobility of a financial planning office significantly opens up client data and the business to cybersecurity threats like never before.
5. Client communications will increasingly move to a digital footing, as clients expect immediacy and accessibility of their communications. While email still works well, text messaging is a rapidly emerging addition that is already being used effectively for reminders, prompts confirmations and security. However, for many planners, social channels remain a largely untapped opportunity.
6. Clients are no longer comparing the services of a planner to banks and institutions. Instead, they are starting to compare financial planning to the information flow that is timely and relevant from the likes of Google, Facebook and Amazon.