Recep Peker (left), Peter Worn and Matt Heine

The importance of adopting technology has been hammered home to advice firms, but there are warnings from industry players that it’s not the only indicator of long-term success or failure.

The Netwealth ‘AdviceTech 2023 buyer’s guide‘, which surveyed over 300 advice firms found that spending on technology has remained consistent, hovering at an average of 7.7 per cent of revenue, representing a slight drop from last year’s 8.0 per cent.

SuitabilityHub managing director Recep Peker says firms are turning to tech to bolster their capacity to serve, and some are carefully curating their technology partners to realise their business goals.

“This is to serve more clients, increase profitability, create the space to have deeper relationships with a smaller group of clients, and so on,” he tells Professional Planner.

The Netwealth report elevates AdviceTech stars, dubbing them ‘elite’. They enjoy greater revenue (77 per cent earned over $2 million last financial year), serviced more clients (30 per cent have over 500-plus clients), and employ more staff.

Peker says the AdviceTech stars are a window into this segment of advisers and serves to validate the outcomes that can be enjoyed by advice firms that invest in selecting and adopting technology more suitable for how they want to operate their practice and for their target client market.

“One of the key variables that set apart practices who adopt technology well from those who do not is having a dedicated in-house technology manager,” Peker says.

“Choosing the right tech stack is only the beginning – businesses than need to integrate the technology into their daily processes, ensure staff are appropriately trained in using all parts of the tech stack together in a best-practice way, and maintain appropriate cybersecurity standards.”

Finura Group joint managing director Peter Worn also points out that while a thoughtful tech approach may correlate with better financials, one would never want to assume this is the sole driver of success. “It’s like crediting a hammer for building a great house,” he says.

“We still see significant under-investment in configuration and support and focus on price as the leading decision factor in technology. This has to change for firms to be successful in the next decade,” Worn says.

He believes the report favours those juggling more tools.

“In Finura’s work with IFAs, there’s a strong preference to rationalise technology usage and focus on maximising their utility through configuration,” Worn says.

“We see an inverse relationship between the variety of tech used and system performance.”

Worn says there has been “brilliant” firms burned by costly tech blunders.