Advice practices expect existing technology advisers to handle regulatory obligations rather than relying on purpose-built third-party software, according to research from Netwealth.
The investment platform’s 2022 AdviceTech Report found 84 per cent of advice firms have increased their investment in regtech in the past 12 months, including almost 60 per cent who believed it has “increased a lot”.
Managing legislative obligations was unsurprisingly the most cited reason regtech is needed, followed by process/workflow oversight and management.
However, Netwealth marketing general manager Andrew Braun says the increase in spend is much lower than expected.
“Only one in three business are looking to increase their spend [in regtech],” Braun says.
“What we found was that a majority of people are looking – plus 60 per cent in most instances – for their existing technology providers whether that be an investment platform or their CRM to help resolve these compliance issues.”
Braun says practices were only infrequently using third-party software systems for regtech.
“I suspect that’s why only one in three were looking to increase expenditure,” he says.
Braun says younger companies – defined as under three years or three to seven years old this survey – are more interested in compliance and regtech issues.
“Single-disciplinary firms are probably less likely to rate regtech as important, compared to multi-disciplinary firms in the next five years,” he says.
Regulatory obligations are a key source of tension and trepidation for the industry, with even Quality of Advice Review lead Michelle Levy discovering early in the role the industry’s “considerable fear of non-compliance”.
Braun notes the extensive discussion around regulations in the industry and a lot of debate.
“We were interested in trying to understand if advisers and advice firms were trying to utilise technology to address the increased regulatory burdens – fundamentally, that’s what we were trying to understand,” Braun says.
Findings from the report earlier in the year indicated that improved tech adoption was linked to staff happiness.
The research uncovered that most advice firms use an average of 14 technologies in their practice, with most staff using it at least daily.
“When we think about improving staff satisfaction, our focus often turns to increasing pay, improving staff culture, giving more leave or providing other employee benefits,” Netwealth managing director Matt Heine said.
