The non-existent ‘nirvana’ of a total practice solution
It will take time for technology to be able to cope with the complex needs of financial advice, meaning outsourcing will remain the dominant option for advice practices looking to reduce their workload.
Many firms were using outsourcing firms to carry out administrative tasks for them and research had shown the ability to delegate compliance and legislatives tasks away to focus on high-value tasks was the key for a thriving business.
While services existed such as Xplan, many advisers found it difficult to integrate technology into all the various parts of the business.
David Carney, founder of Virtual Business Partners, said: “There is a race between technology and outsourcing and technology will win eventually but it will still take some time yet. Technology options exists but it is fragmented so outsourcing will work for now.
“Every firm has their own ways of doing things, even within the same license, and the nirvana of a total practice solution doesn’t exist yet.
“No financial plan is fixed in stone, it gets out of date and needs updating regularly and software struggles to deal with all the different parts of the process.”
He said most firms who used the VBP services opted to use them on an ongoing basis to fulfill tasks such as paraplanning and administration which allowed them to focus on high-value tasks such as dealing with clients.
Regarding technology and robo-advice, Carney said there would be a place for it but mostly for people with smaller sums of money.
“That’s not to say some software can’t handle it but for people with any substantial amount of money will want to deal with a human being. For smaller amounts of money, you might see the advent of a robo-adviser strategy,” he said.
“My opinion is the banks will re-enter the marketplace in this space in an appropriate period of time. They have their advice models which they have developed over the last 20 years and they will not want to be kicked out, they are not going to want to leave that marketplace.”
AUTHOR
Laura Dew
Recommended for you
As the end of the year approaches, two listed advice licensees have seen significant year-on-year improvement in their share price with only one firm reporting a loss since the start of 2025.
Having departed Magellan after more than 18 years, its former head of investment Gerald Stack has been appointed as chief executive of MFF Group.
With scalability becoming increasingly important for advice firms, a specialist consultant says organisational structure and strategic planning can be the biggest hurdles for those chasing growth.
Praemium is to acquire an advanced technology firm for $7.5 million, helping to boost its strategy to be a leader in AI-powered wealth management.
