Advice firms are increasingly being compared with big technology companies that are part of their clients’ lives and will need to start adopting technology that smooths out the friction points in their process for consumers, Netwealth joint managing director Matt Heine has said.

Speaking at the Association of Financial Advisers’ national practitioner roadshow event in Sydney, Heine defined friction as “anything that gets in the way of your customer or potential customer completing the job or activity they set out to achieve” and said “less friction is the new norm”.

He explained that the world’s biggest companies have managed to remove friction almost entirely from their processes – and that this was the standard by which clients now judge advice firms.

“Clients are no longer comparing us with other financial planners, and they’re no longer comparing us with other financial institutions – they’re comparing us with the world’s biggest tech companies,” Heine explained. “Our expectations are set by the last company we interact with, and the last company people interact with is likely to be Google or Facebook.”

Heine – whose investment platform company floated in late 2017 with a valuation of more than $1 billion – is a noted fintech advocate and sees technology as the key to improving the advice process.

“There’s a whole lot of technology we can be using to overcome these hurdles,” he said.

Pain points and remedies

Heine identified specific areas of friction in the advice service cycle and some ways to alleviate them.

In the initial prospecting and discovery phases, he said, clients are being bombarded with too many complicated and invasive questions they aren’t equipped to answer. While clients should be telling the advisers as much as possible about their circumstances and objectives, they often don’t have the information to answer planner’s queries, don’t understand the question, or aren’t comfortable responding.

“Think about the risk profile,” Heine said. “How does the client possibly answer a question about how they’d feel if the market fell 20 per cent if they’ve never experienced it? We’re asking them a bunch of questions they just don’t understand, and they’re embarrassed.”

He suggested employing chatbots outside of clients meetings. He said these were easy to set up, could be “injected with personality”, and had the advantage of living in the client’s environment.

For the advice phase, Heine identified several ways that getting a Statement of Advice to a client could cause friction. The document could take too long to process, the strategies could be too confusing, and there could often be a frightening array of disclaimers, he said.

“Most advisers typically take somewhere between four and six weeks to deliver an SoA,” Heine reckoned. “And the client has no idea; they’re sitting there wondering why it’s taking so long.”

Heine pointed to next-generation SoA production tools, such as Nod – which he is personally invested in – that help advisers produce scaled advice documents quickly.

The implementation phase of advice is another that often leaves clients in the dark, he said. Once clients sign and send documents, “they don’t know what happens from that point onwards”, he said.

He also warned that digital ID adoption would need to increase, he said, or advice would fall behind the clients’ other service experiences.

“A lot of people simply do not have printers these days,” he said. “Yet, what do we do? We send them a bunch of emails and documents they have to print off, scan [sign] and return. Where do they do this? Officeworks?”

Heine argued that increased managed accounts usage would improve the client experience dramatically.

“From a friction perspective, one of the beauties of managed accounts is that clients aren’t expected to constantly sign and understand RoAs and return paperwork,” he explained. “From a business perspective, you’re obviously not having to implement all those individual pieces of advice.”

Omni-channel advice

The most important part of the advice journey, Heine argued, is engagement and education.

“This is where we can add significant value to our clients’ lives,” he said. “It’s about helping them become more financially literate. How can we make it more interesting and engaging?”

Heine saw omni-channel advice as key to maintaining engagement levels. Advisers should be meeting clients where they are, he said, such as their phone, watch, or laptop – or in their car.

“We have to look at how we’re going to stitch all these platforms together in one place,” he said. “There are a plethora of ways that we can provide education to people.”

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning. Contact at [email protected]
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