‘Strip it back’: Advisers contributing to efficiency burden

While technology is seen by many as the key to solving efficiency challenges for advisers, a consultancy head has argued that advisers themselves are also contributing to this burden through unnecessary overcomplications.

In the wake of the Hayne royal commission, advisers have been weighted down by overregulation and compliance burdens that are taking up their time on administrative tasks and essentially capping their client capacity. 
However, with the continuous evolution of technology, some have developed the misguided belief that adopting more technology in their business will resolve these troubles.

While there is no denying advisers have seen more regulatory and compliance burdens placed on them in recent years, Danni Le Grande, head of IFA consulting at Finura Group, suggested that some of these struggles are self-inflicted.

“We have created a million ways to do the same thing,” Le Grande said on an episode of Netwealth’s Between Meetings podcast.

“If you look at what all advice firms do in terms of the advice journey, they’re all onboarding clients. They’re all doing discovery, so fact-finding and risk-profiling with their clients for the most part. Then they’re producing the advice, so they’re researching, producing advice, implementing the advice, and then they’re reviewing the advice. 
“I think we’ve just really overcomplicated a reasonably simplified process.”

In order to address some of this uncertainty and complexity, Le Grande said advisers should strip back their technology to ensure what they are using actually helps rather than constantly jumping on new technology trends in hopes of finding the “silver bullet” that will solve all their issues.

”Technology broadly does what it says it’s going to do. But I think too often we’re trying to fit a square peg into a round hole or really overthinking. I get that we have the underlying nuances in the tasks that happen under those headline workflows, and that’s fine. That all aligns with your client value proposition and all of those things, and that’s okay.

“I just feel like we’ve really overcomplicated the process, and we do sometimes blame that on the regulatory environment. I think we can probably do a little bit of work as advisers and advice firms to simplify things and take a step back, unpack it all and rebuild it into something that’s a little bit more simplified, which means that you’re going to be able to give your clients a better experience because you’ll have more time to do that.”

Notably, as rising operating costs, including technology costs, continue to be a point of frustration, Le Grande suggested that if advisers expect technology to be responsive and shift with regulatory changes, then they can’t expect the cost to simultaneously reduce because change implementation takes time and resources which ultimately costs providers money.

While it is unlikely technology costs will come down, she said that in her experience there is always a positive return on investment (ROI) through efficiency gains though, so long as technology is implemented in a meaningful way.

“Look at technology, not necessarily as operational expenditure, which, of course, it is, but also as an investment, because as soon as you start investing in technology and adopting it meaningfully … then you can really, and we certainly see this with our clients over a period of time. We do see that positive ROI from investment in technology. We never see anything go backwards. It’s always more efficiencies, happier team members, and all these things that don’t necessarily have a value on the P&L.”

With the ability to scale and capacity becoming increasingly important for advice firms, Le Grande said: “Technology is going to be the enabler of scaling your business and getting out to more clients.”