Only one in eight financial advice practices can call themselves an “AdviceTech star”, according to Netwealth, but the select few that reside at the top of the advice technology stack are much more likely to have more funds under management and be more profitable than their less tech-inclined contemporaries.
The provider’s 2020 AdviceTech Report says it is a “moot point” whether the investment in tech drives the success of a practice or this investment is naturally ingrained in the mindset of successful business owners. Chicken or egg questions aside, the report explains, the tech savvy firms are the ones making money.
“What is not in dispute is that AdviceTech Stars are typically in robust financial health,” the report states.
The report broke down 300 advice practices in terms of technology adoption and business success, and found that the top performers in terms of technology adoption – ‘AdviceTech Stars’ – made up 12.1 per cent of the respondents. These firms averaged a business success score of 69, above the technology adoption ‘moderate performers (with a business score or 53).
At the bottom of the table, the 22.5 per cent of AdviceTech “laggards” averaged a business success score or 39.
There was an anomaly in the reporting, as the fourth worst out of five segments – the pragmatists – had the second highest business success score of 62, yet this segment was the smallest at 10.4 per cent.
But it is the AdviceTech Stars that have most been able to harness tech for success, the report explains.
“AdviceTech stars are a select group,” the report states. “Only one in eight financial advice practices can be described as AdviceTech Stars and they have not attained that title by accident. By definition, they are successful businesses with higher average FUA and revenue.
It is not simply about how much the most successful businesses invest in AdviceTech that sets them apart from the others, the report continues.
“It’s also about how they structure their investment, how they plan ahead, and about their mindset – including a willingness to stand apart from their peers to adopt new technologies that others might be slower to take up.”