Recalling his early days as a paraplanner 20 years ago, Finura Group managing director Peter Worn is shocked that same software remains in use today.
“Things have changed enormously,” he said in a webinar hosted by platform provider Praemium earlier this week.
“What hasn’t changed is the perpetual question we face: Why, in the year 2023, are we still struggling to deliver timely advice? Why is it that, despite living in a world brimming with technological marvels, the delivery of financial advice remains ensnared in a six-hour time frame?”
He said that advisory businesses can utilise technology to make their practices more efficient and simplify the complex processes that are typical in the industry.
The industry has, however, been relatively sluggish in adopting technology to revolutionise advice processes, according to Worn.
“Advice businesses, the war for talent, and the rising costs of having employees is really making it harder and harder for advice businesses to scale than the way that they used to,” he added.
Worn stressed that the allure of tech trends must not overshadow strategic rationale.
“In a relationship-driven industry, it’s common to make an emotional decision due to vendor dissatisfaction or the belief that tech can solve complex issues,” he said.
He then advocated for pragmatic decisions that align with business objectives.
Embrace tech or fall behind
How the industry should use technology and artificial intelligence (AI) – or if it should at all – has been a topic of debate in the advice industry due to the proliferation of AI technology like ChatGPT.
Neilson & Co Wealth managing partner Ben Neilson, told Professional Planner in May that technology and AI will, at best, complement professionals rather than replace them.
Dash CEO Andrew Whelan and paraplanner.ai chief growth officer Alex Gassner said in recent months that AI will be used in the background to support the advice process, leaving human advisers to build client relationships.
Adopting technology is a necessity to stay competitive, according to Worn, but smaller practices will face a significant challenge to do so as a higher proportion of their financial resources will be allocated to technology.
Although cost reports often include subscription and licensing expenses, they lack the depth needed for a comprehensive view. This can lead to budget surprises and misalignment between expected and actual expenses.
Worn predicted that technology spending (currently five to ten per cent of businesses’ revenue) will rise over time, mirroring trends seen in the US.
An essential aspect of technology decisions is their impact on client and employee experiences.
“Attracting and retaining talent is a key challenge,” he said, adding that professionals are seeking more efficient workflows.
Worn addresses technology decision failures, attributing them to execution, alignment, and due diligence. He suggested shorter project timelines with clear objectives and greater focus to mitigate risks.
Due diligence is critical, he said, as the software industry’s volatility demands careful vendor assessment.
“Merely relying on cheap labour without robust technology leads to more hiring,” he warned.
“The outsourcing strategy could backfire if technology isn’t a strategic partner.”
