Do we really need more advice tech?

Peter Worn, Joint-Managing Director at Finura Group

Despite the dominant role that IRESS has played in the advice tech ecosystem for over a decade, advisers, licensees & IFAs are forever bombarded by a growing range of fintech offerings claiming to solve various pain points in financial advice.

Fuelled by a desire to take on established incumbents and readily available capital, it is clear why so many see the opportunity to build new solutions for the sector.

The data suggests the take-up of these new offers remains limited, and inevitably these providers run into a common problem.

There are not enough advisers to sell to.

With adviser numbers steadily declining, WEXIT by the banks, mid-tier licensee mergers, and the dispersion of IFAs, it is challenging to sell software products into this market. Outside of the investment platforms, licensees and IFAs are capital constrained and suffering from compliance fatigue with little bandwidth to run software change management projects.

So what is the answer when we are all hungry for innovation?

Rather than encouraging more complex adviser ‘tech stacks’ – often just loosely integrated and overlapping solutions – we need a more nuanced approach. Maximising the existing infrastructure within advice firms and leaning more heavily on the global enterprise platforms offered by Microsoft, Amazon & Salesforce.

These trillion dollar firms are making mega investments in AI, Machine Learning and IoT technologies that will give financial advice all the tools it needs to innovate and expand services to new customer segments. In 2020 alone, Microsoft spent US$19B in R&D, mainly in cloud engineering and AI/ML. This is equal to the entire R&D spend of every company in Australia.

Leveraging these technologies, there will be a significant opportunity to build new applications and helping licensees and advisers implement them. Some are already well progressed on this journey.

Yes, you absolutely need specialist advice tools to help you produce and deliver financial advice. But don’t ignore the mega technology providers, who will underpin business productivity, data capability and customer innovation for years to come.

Suggested Reading: Hit Refresh -Satya Nadella, CEO Microsoft.

1.      Microsoft 2020 Annual Report.

2.      EY Report into Australian R&D 2020.