Harnessing technology for efficiency

Technology may be vital for increasing efficiency and decreasing costs but the key to achieving this lies in how financial advice practices implement and utilise it, Jassmyn Goh writes.

A quick assessment of financial advice practices would suggest that the most significant impediments they face are management, efficiency, and technological implementation. 

While these factors can encumber practices, there are a number of underlying issues they need to address before these elements can fall into place. 

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At the same time however, excessive focus on key practice management areas can distract advisers from the very foundation of advice practices – quality financial advice.

William Buck director for wealth advisory, Adrian Frinsdorf, believes where advisers were faltering the most was their excessive focus on business efficiency rather than their clients. 

He questioned whether practices were designing their output for clients.

“I see a lot of practices that actually design their business processes to suit them and then the client has to fit. The massive move toward wrap accounts is an example of that, and I think the move to managed accounts is an extreme example of that,” he said.

“We’ll use wraps where they are appropriate… We’ve become efficient by creating efficiencies in people and training people quite considerably but we haven’t invested in managed accounts, wrap accounts, and the like.”

He said too many practices had every client on a wrap account despite the fact that it would not suit all clients.

“You can’t tell me it’s what’s best for the client when every client that is on a wrap account… You get a very efficient practice but the client pays an extra fee for that wrap account, but do they really need it?” Frinsdorf said.

According to Investment Trends’ May 2017 ‘Planner Business Model’ report, financial planners’ efficiency had shown little improvement, with planners spending an average of 6.4 hours to produce one statement of advice (SOA), down from 6.5 hours in 2013.

Investment Trends research director, Recep Peker, said the planners who faced challenges with efficiency, compliance, and issuing renewal notices and product disclosure statements said these challenges were barriers to providing affordable advice.

“There’s this recognition among planners that you can’t just focus on clients that have higher and higher balances. You also have to provide advice efficiently to be able to serve the middle wealth of Australians more effectively, and is still profitable for the business,” Peker said.

The report also found that while funds under advice per client increased from $92,000 to $171,000 between 2009 to 2017, on average, total funds under advice per planner had been declining due to planners losing both active and passive client relationships.


For knowIT Group’s chief executive, Wayne Wilson, the biggest pitfall for practices was the management of the total business process design.Wayne Wilson300

He said how practice managers and owners chose to use technology to supplement the way they interacted with clients could be the difference between a highly productive planner with strong client relationships and a very disorganised planner with low productivity.

Pointing to knowIT’s ‘Future Ready VII’ report, Wilson said only four per cent of practices had effectively implemented client management systems, which led to a 265 per cent increase in profit. 

While 98 per cent had some sort of automated client relationship management (CRM) system, only 32 per cent said their workflow management was fully integrated into their system.

Wilson noted that many practices were not communicating or were poorly communicating with clients and this could be improved with technology. Only 28 per cent reviewed their ‘A’ class clients at least quarterly, 44 per cent met with their best clients, and 28 per cent scheduled an annual review, and 38 per cent reviewed their ‘C/D’ class clients only when the client requested it.

The report found that only one per cent of practices said that they had an effective implementation of their client review process which had led them to an increase in profit of 557 per cent.

“This is a classic example of using technology effectively to drive great outcomes in practice management,” he said.

Wilson said historically practices had looked to single systems to provide all solutions – like Coin and XPLAN – but going forward, advisers would be looking for “best in breed” software to deal with each of the issues they were looking to solve with technology.

“They might have a ‘best in breed’ CRM, workflow management system, financial planning strategy system, or investment solutions. Many of them are looking at robo-advice products to provide investment solutions for clients going forward rather than that fully integrated approach,” he said.

“Many advisers are looking to take single best in breed applications to deal with their needs in terms of providing better service to their clients.”

Frinsdorf said while XPLAN had received negative feedback from the advice community, William Buck was very comfortable with the software.

He said it was a lack of knowledge that held practices back on XPLAN as it was very specific and not easily understood by advisers.

“We have a person and probably 75 per cent of his job is managing XPLAN as XPLAN doesn’t manage itself tremendously well, so we’ve put a resource down. We’re lucky enough to be of a size where we can do that, smaller firms certainly wouldn’t be able to do that but it has increased our knowledge and use of XPLAN,” Frinsdorf said.

Elixir Consulting’s managing director, Sue Viskovic believes advisers also need to be aware of what software systems are actually out there to help them deliver a better client experience and to increase efficiency.

She said there were a number of practices that would spend huge amounts of money on their CRM for years but had not harnessed the power of it.

“There are some really fantastic systems out there and that are coming to market. You don’t have to sit down in front of a client and fill in a 20-page hard copy document and then go through a shoebox full of statements. You can utilise data feeds to create a fantastic experience and really improve the quality of advice you’re giving,” Viskovic said.

“The advisers that don’t keep their heads up and keep their eye out on what is available to them are missing out on some great software. It’s not just efficiency, it’s a way of improving the advice they’re giving.”


While large practices have the resources to bring on board an employee to help with a specific task, many small busy practices do not have the same capacity. 

Viskovic suggested that these small practices could make use of outsourcing a task or pull in staff as and when they needed it.

“Some of the best practices recognise that they can leverage people with various skills around the world to do things that aren’t advice related. That’s the beauty of technology nowadays, you don’t have to have a full-time web builder on staff,” she said. 

“But it’s a question of time, some advisers feel so busy that they don’t have the time to down tool and look at alternatives. But if you keep doing what you’ve always done, you might not even get the same results as you used to because the world is changing around you.”

Viskovic said there were even groups on Facebook where advisers could share and understand ideas so that they did not have to do all the homework and could talk to others that had used it.

Wilson said the two ways of using technology to increase productivity was to either take away manual processes with technology processes such as robo-advice, or to outsource the function to someone who implemented the technology on the practice’s behalf.

“There are a lot of people who still outsource their brokerage and commission reporting to external service providers who use technology to manage that service on behalf of their financial planning practice clients,” he said.

He also noted that there were practices that outsourced data gathering where technology was used to send and receive clients and prospects digitalised data to save the labour intensive component of receiving data in written format and then having to manually enter it into a computer.

FOFA and LIF regime impact

While there were reports in the media that some advisers had felt that the Future of Financial Advice (FOFA) regime had impacted their practice’s profitability, Wilson said that was “probably reflecting a lack of efficient business administration rather than necessarily FOFA being the straw that broke the camel’s back”.

He said the ones that could deal with the added required communication layers were the ones that had a largely efficient business.

Peker said planners had increased their focus on servicing clients with higher balances, and planned to provide more single piece, standalone advice to offset the negative impact of FOFA, including practice profitability. 

However, ClearView and Matrix head of strategic advice, Allison Dummett, said across the board the industry had been coping well with FOFA.

“It has been challenging for many small businesses to overhaul their client records, automate their systems and build repeatable processes in order to meet their ongoing disclosure obligations but advisers are embracing FOFA’s requirements,” she said.

Similarly, with the introduction of the Life Insurance Framework (LIF) that comes into effect next year, Dummett said many practices had already started moving to hybrid or level commissions and an increasing number were broadening their value proposition to include budgeting and cashflow management, superannuation, investing, and retirement planning.

“By adjusting their remuneration models early and expanding the scope of their advice, advisers can diversify and potentially grow their revenue and will be better positioned to thrive under LIF,” Dummett said.

‘Investment Trends 2016 Planner Risk Report 2016’ found that the average planner had seen risk advice fall from 35 per cent of their total practice revenue in 2015 to 28 per cent, the lowest since 2013.

The research showed that planners would look to provide insurance advice as part of a broader holistic package more often, charge more for holistic advice, and focus more on higher balance clients.

Wilson felt the same as he expected practices to provide a broader range of advice services because it would be more profitable to do so.

“When your fee-for-service is fixed for ‘how much can I charge for my time’ there’s a max amount of money you can make for every hour that you charge. Then your profit is determined by how much you can reduce the cost of providing that hour of advice,” he said.

“So, it does become more about productivity, efficiency, and using technology to reduce costs and therefore getting your total profit up, and that’s why technology is becoming such a critical player.”

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