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.

“We’ve seen many brilliant firms burned by costly tech blunders. They learned the hard way that a tech roadmap is only as good as its execution,” Worn says.

“Overseas study tours often create the illusion of a tech Shangri-La on offer with shiny new toys. The reality is you need to get the foundations right and invest in the boring stuff that will work in this market.”

Worn says that an uplift in tech alone doesn’t demonstrate true success.

“A true ‘Tech Star’ isn’t one who throws new tech at every pain point, but one who marries technology with people and processes, focusing on investing in a few key systems,” Worn says.

“The report correctly identifies that firms with more resources may be in a better position to execute. Having lots of people does not guarantee success, and in equal measure, we believe that leadership, training and investment are just as important when it comes to technology.”

The report also reveals that the role of technology in client interactions varies. Most firms describe the technology experience offered to their clients as one where tech aids, but isn’t the focus of the client engagement experience.

Firms that rely heavily on tech say their tech stack isn’t yet integrated, but there is a clear desire to improve this. Businesses that are working hard to adopt new tech are also reaping the rewards.

The report found that client portals are moving from niche to maturity, that integration technology is improving admin efficiency, and that people management technology to help staff administration and productivity is on the rise.

“Technology is a key enabler of efficiency, scalability and client engagement for advice businesses, and the [report] aims to help advisers and licensees navigate the complex and dynamic AdviceTech landscape and make informed decisions about the best technology solutions for their needs and goals,” Netwealth joint managing director Matt Heine said in a media release accompanying the report.

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