Every industry has experienced the need to accelerate digital initiatives. With advice costs soaring for financial planners, the need for digital solutions has never been greater.

With so many options available in the market, the choice can seem overwhelming. But it need not be.

Here are some tips for financial planners on finding and implementing technology in 2022.

Survive or thrive  

KPMG’s recently released report, Cost Profile of Australia’s Financial Advice Industry made some rather interesting findings. It found that the cost to prepare a comprehensive Statement of Advice (SOA), which it estimated at over $5,300, exceeded the average fee charged for it by a margin of over $2,000, a significant difference. The increase in regulation appears to be the major factor for this, while the use of technology can improve these outcomes.

The high cost of delivering advice is not new. Perhaps what many have underestimated is just how much profit margins have been eroded. It highlights why firms need to better adopt new technologies.

The landscape

To better understand the technology landscape, let’s divide it into two different categories – core and non-core. Both have their role to play in helping a firm run a profitable operation.

What’s the difference between them?

Core applications are specific to the financial planning process, while non-core applications tend to be more business focussed and may not necessarily be financial planning specific.

Core systems

Let’s start with the core. A core system should fulfil three important functions.

First, it should allow firms to easily capture data about their clients. Gone are the days where client data is transcribed onto a piece of paper and then manually entered into a database.

These days online client portals allow data to be captured digitally. With fact find and data capture automated, time can be freed up to focus on the more value adding parts of the advice delivery.

Secondly, it should allow financial planners to deliver better outcomes for their clients. Strategy modelling software with visual graphs, helps the planner demonstrate the value they are adding to their clients and empower them to make better decisions with powerful illustrations.

We are seeing a strong trend emerge – where strategy modelling is being used not only for new clients – but also in the review process allowing planners to interactively update models as their clients’ circumstances change.

As one financial planner said: “With many ongoing clients to manage, it’s important to keep the review process interesting and engaging. We run live models every year as part of our review offering. Our client satisfaction has gone through the roof.”

Thirdly, it should provide robust document automation capabilities allowing lengthy documents such as Statements of Advice, Review Reports, Fee Disclosure Statements etc. to be produced quickly.

Finally, to avoid duplicating data entry, it is important that the core system consists of one piece of software rather than being managed on multiple applications.

Non-core systems 

Non-core systems keep other important aspects of the business operating.

In a tech saturated market, it is easy to go overboard.  But sometimes less is more. We find that most firms will have a need in three areas: revenue and performance management, marketing, and office staples.

For revenue management, simple accounting and bookkeeping systems may suffice (e.g., Xero and MYOB). But as a firm gets larger with varying client segments and multiple revenue sources, more sophisticated revenue management software, ideally integrated with the firm’s core system, is often necessary (e.g., Revex).

Performance dashboards allow practice owners to see how their business is performing at a glance and to identify areas for improvement. Such software may also provide direct debit managing and processing. Direct billing is likely to gain popularity in 2022 particularly as the impact of the new Ongoing Fee Arrangement (OFA) legislation takes hold.

For marketing, there is no shortage of options available. Popular email automation systems include Campaign Monitor and Mail Chimp. Such systems are generally inexpensive and provide graphic rich content perfect for client newsletters and prospect management.

For office staples, it is hard to go past Microsoft 365 for business. The cloud version includes Office essentials (e.g., Outlook, Word, Excel, PowerPoint etc) and can be scaled up to include other apps within Microsoft’s eco-system such as Teams for video conferencing and SharePoint for document management.

Finally, in this new world of remote working, we can expect to see greater use of online document management systems, centralised password management software (such as LastPass), automated calendar booking systems (such as Calendly) and digital signatures (such as Docu-sign).

Your team

Lastly, yet most importantly, it’s not just about technology. It’s about the team.

You can have the best software in the world but if you don’t properly implement it, it won’t be much use to the business.

Gartner’s (2020) findings revealed that more than 20 per cent of software expenditure on average is unused.

To ensure technology is being used properly, train your team members, and perform regular check-ups to confirm the technology is providing increasing efficiency, reducing administrative time, and overall providing value to the business.

FPA has made a number of tools and resources available to members to assist in implementing new technology solutions into your business including a technology buyers guide and checklist. Find out more here.

Plutosoft is a comprehensive cloud-based financial planning software and practice management program.