One of the challenges for financial planning businesses over the next 5-10 years is reducing the cost of advice for consumers. Are integrated CRM systems and end-to-end advice solutions the answer for making advice more affordable to Australians? Jayson Forrest reports.

The financial planning profession is currently riding out the ‘perfect storm’, as Professional Indemnity insurance and regulatory and compliance costs continue to steadily increase year-on-year. Such cost increases are becoming difficult for many advice practices to absorb without either affecting the quality of services provided or raising their client fees. It’s not surprising that these compounding costs are making advice less affordable for Australians.

Add to this the additional impositions placed on planners by the FASEA regime, resulting in the departure or early retirement of planners from the profession, placing further constraints on an already highly stressed market. In fact, findings from the Adviser Ratings ‘Australian Financial Landscape Report’ estimates that the drop in planner numbers over the last three years has seen a proportional increase in the average price of advice by about 23 per cent over the same period.

All these factors are conspiring to create the ‘perfect storm’, making the cost of advice arguably one of the greatest challenges facing advice businesses over the next 5-10 years. However, could integrated CRM systems and end-to-end advice solutions be the answer to reducing spiralling business costs and reducing the cost of advice for Australians?

The cost of business

Technology has long been touted as the answer to lowering the cost of advice for consumers. But how realistic is this, particularly when considering that most advice businesses still take a piecemeal approach to technology, which can add significant additional operating costs for a business?

Ask Morningstar Australasia managing director, Jamie Wickham, and he is adamant that improvements in technology will allow financial planners to operate at a much broader scale than they do today, which he believes, will effectively drive down the cost and complexity of running a business. This, he says, will flow through to the cost of advice to consumers.

“Improvements in technology will drive gains in business efficiency. This includes automating many mundane but essential tasks that planners routinely deal with, such as fulfilling annual opt-in requirements,” says Jamie. “This will allow planners to drive down the cost of advice, enabling them to spend more time with existing clients, while potentially expanding the number of clients they can serve.”

Jamie believes integrated CRM systems and end-to-end advice solutions are definitely the answer for making advice more affordable to Australians. He adds that the key to achieving this resides in designing integrated processes that enable efficiency gains.

“It’s all about the ability to customise a CRM system, and for that CRM system to integrate across the different components of an end-to-end software solution. By achieving these efficiencies, you’d expect the cost of advice to drop, making it more affordable for consumers.”

Moving closer to integration

At Melbourne-based advice practice, Pekada, the business’s co-founder and principal adviser, Rhiannon Kanoniuk AFP^®, reveals that the business currently uses a couple of different software solutions to make up its tech stack.

“These solutions are aimed at elevating the digital experience of clients. We want to provide an advice experience for our clients that is on their terms, not ours,” says Rhiannon. “For example, we use Astute Wheel, which is great software for client engagement.”

She concedes that having a piecemeal approach to technology means the business has many third-party providers it needs to deal with, which is not ideal. But still, the business is aiming to make the advice process as seamless and automated for clients as possible.

“As technology becomes more integrated across the profession, and data actually feeds through to the external third parties we deal with, that is where our cost to serve should come down. But we’re not quite there yet,” Rhiannon says. “So, while we’re using our tech stack to provide a first-rate client experience, we need to tie all the technology elements together in the back-end in order to reduce the cost to serve.”

However, Rhiannon is confident the profession is much closer than it was just five years ago to being able to roll out fully integrated advice solutions.

“Currently, the biggest driver of our business is working out how we can improve our technology and improve our digital client experience, because not only will that help drive down the cost of advice, it’s also what clients expect,” she says.

“As an advice business, you can’t just keep comparing yourself to other advice practices. You need to compare yourself to other businesses that clients are interacting with on a daily basis, like Amazon. That’s the type of digital experience they are going to compare your business to and expect to receive from you.”

This desire to improve its digital client experience led Pekada to try a relatively new CRM system – Lumiant – which it hopes will bring financial conversations with clients, as well as file notes, to life throughout the entire advice journey.

“We’ve been using this solution since January this year and we’ve found it to be a game-changer for us in bringing to life the depth of conversations we’re having with clients,” she says. “When you think of your role as a planner in a client’s life, the real value comes in the depth of the relationship planners can forge with their clients, including guiding them through all the complexities of life and their life stages.

“This particular CRM system has been great in getting the client to articulate what their core values and goals are. The system is a facilitated way of getting the client to really think abut what matters to them. So, when you eventually do the core strategy for the client, you’ve got a ‘North Star’ to navigate by to help clients live their best lives.”

Rhiannon believes when planners start to dig deep into what clients care about and explore their values in life, that’s where they can really flesh out and develop the ideal financial strategy for clients. And a good CRM system can support planners in having these types of effective conversations with clients around their goals and values.

“There are many practitioners having amazing conversations with their clients. But a good CRM system can put these conversations into a systemised format,” she says.

It’s a view shared by FinFit Wealth Solutions’ managing director and senior financial adviser, Phil Sgangarella CFP^®.

“If a client knows that you have updated information and it’s transparent, and you don’t have to spend time as a planner making sure the information is correct, then you can actually spend more time dealing directly with the client,” he says. “This improves efficiency, reduces business costs, and frees up a planner to spend more time with clients on the things that are really important to them, like achieving their goals.”

The Holy Grail

Brisbane-based FinFit Wealth Solutions also shares a similar story to Pekada in its pursuit of an effective end-to-end solution for its business. Phil believes that one of the biggest demands on technology within an advice business is client data collection.

“This includes having automated CRM systems where clients can log in and update their details in a live environment, rather than using the traditional way of gathering client information in a face-to-face meeting,” he says.

At FinFit Wealth Solutions, Phil is using his CRM system for mapping out his clients’ goals and objectives, while also scoping advice.

“We use the ‘myprosperity’ client portal, which allows our clients to link all their information to a central repository. It provides a live feed for client information – like bank loans, cash accounts, investments and superannuation – which provides up-to-date information on the client’s overall financial status,” says Phil. “This system saves us a lot of time from an information gathering perspective.”

When it comes to technology, Phil is no luddite and is a firm believer that technology will be a considerable factor in driving down the cost of advice.

“You need only look at compliance,” he says. “There are so many things planners have to do to be compliant, so you need a technology solution that can complete your compliance requirements as quickly and as efficiently as possible.”

However, like Pekada, Phil’s business currently has a piecemeal approach to technology, using up to four different systems

“I’ve yet to see one end-to-end solution for advice businesses that tick all the boxes,” he says. “So, the major issue currently facing the profession is having a system that does enough, while also being able to seamlessly integrate with other systems.

“We use up to four different systems to manage our interaction with clients, whereas it would be ideal to have just one system that removes all the double-handling that happens when you use multiple systems – that’s the Holy Grail.”

For Phil, an ideal end-to-end solution begins at the the front-end of the advice process – the discovery, the onboarding, the data collection – and extends through to capturing that information into the CRM, to portfolio modelling, providing documentation and advice recommendations to the client, advice implementation, and then through to the review process on an ongoing basis. It’s a complete solution.

And while Phil acknowledges that technology providers do understand the issues facing financial planners, and are developing systems that meet the needs of advice businesses, he believes it’s unlikely these systems will ever deliver 100 per cent of what practitioners and clients need.

“But even if we can get systems that provide 80 per cent of what we need, then that’s still much better than having four systems giving you 25 per cent each of what you need,” he says.

However, Jamie disagrees, saying that effective end-to-end solutions do exist.

“The key to delivering an effective end-to-end solution is ‘integration’,” says Jamie. “It’s ensuring that all the applications in an end-to-end software solution are fully integrated, and the data is being shared efficiently from one application within the system to another. Quality data leads to quality advice, which provides quality outcomes for the client.”

Ideal expectations

As the head of Morningstar Australasia, Jamie is at the coalface of providing highly specialised services to planners. He acknowledges that practitioners are very direct in telling him what they want in a fully integrated CRM and end-to-end advice solution.

Top of the list is software integration, allowing the seamless sharing of data across systems for the efficient delivery of advice.

“Not every financial planning software solution can do absolutely everything for every client. Different planners have different needs, different systems that they want to use, and different ways of engaging with their clients,” says Jamie. “So, the importance of the integration of other tools via application programming interface (API) is critical.”

Ask Rhiannon what the ideal CRM system looks like for her business and from a client perspective it’s a system that is seamless, cost-effective and easy to use, which brings to life a client’s ‘financial life’.

And what about from a business perspective?

“Then we’re talking about a CRM system that is automated and administratively efficient, which can remove much of the human error than creeps into the financial planning process. We’re also talking about a system that uses artificial intelligence to quickly and effectively answer complex financial questions, as well as all the other ‘bells and whistles’ that are involved in creating excellent advice.”

Similar to Phil, Rhiannon is yet to find a system that provides a seamless end-to-end solution for her business. And while she is hopeful that Lumiant will be that solution, she doesn’t believe the technology is quite there yet.

“If you can replicate the experience of a planner and move it across into an automated and digital environment, then as a planner, all you are then doing is managing the client relationship. And that’s where I believe advice businesses can bring down the cost of advice and make it more affordable for consumers.”

For Phil, an end-to-end technology solution is his definition of ‘utopia’.

“The ideal system is fully automated and allows clients to update their information and have it stored in a central and easily accessible repository. The ideal system also provides live data feeds to other systems. It allows you to generate all relevant documents that are compliant, with the ability to customise those documents, while allowing you to manage the client on an ongoing basis,” he says.

“Effectively, every time you have an interaction with a client, your CRM system needs to provide this functionality efficiently and as quickly as possible, which will absolutely help drive down the cost of advice.”

What to consider

When it comes to implementing a CRM and end-to-end solution, Jamie says there are two key areas that advice professionals should be considering: the technology provider and the application itself.

“When choosing a technology solution, you need to do your due diligence on the technology provider and their product,” he says. “Planners need to consider whether the provider is actually serious about financial advice, is committed to the profession, and is able to clearly demonstrate that commitment through its offering.

“Technology providers also need to have adequate financial backing and a long-term plan of where they see financial software going. This includes how they will support planners now and into the future with software development.

“This roadmap needs to align with the needs of the planner and the advice business over the short to medium-term. This includes ensuring that philosophically, the technology lines up with how the advice business is delivering advice and servicing clients.”

For advice businesses thinking about implementing their own technology solution, the FPA provides a range of resources at fpa.com.au/fintech. These include tools, checklists, fintech providers, and technology assessment templates.

And what about Morningstar? How is this global research and investment management company helping advice businesses lower the cost of advice to clients, while improving business efficiency and profitability?

“As a business, Morningstar is committed to advice and the financial planning profession,” says Jamie. “While we’re best known for our research and investment solutions, and our capabilities around data management, we’re also supporting planners in other ways. This includes through our financial planning CRM, AdviserLogic, and our acquisition of the risk profiling system, FinaMetrica.

“We believe this suite of services will help planners reduce their compliance risks, improve their efficiency and most importantly, deliver the right outcomes for clients.”

And while Jamie believes Morningstar offers a compelling integrated service offering, he concedes that planners will always want additional services that sit outside its core offering.

“We certainly think there is more opportunity for us to leverage the knowledge we have of the end investor and our behavioural science expertise to better support users of AdviserLogic and the conversations they are having with clients,” he says.

“So, right across Morningstar, we have plenty of capability and technology that can help reduce the cost of advice to investors. We are stitching all that together to deliver the Holy Grail to financial planners – a fully integrated end-to-end advice solution.”

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For more information on software selection and finding the right technology provider, go to fpa.com.au/fintech