By Steve Mitchell, Head of Adviser Strategy, FE fundinfo
At the turn of the Millennium, there was a theory within the British cycling team that the sum of marginal improvements could lead to monumental results.
It is otherwise known as the 1% Rule and was credited to the British cycling team’s phenomenal success in the years that followed. Prior to 2007, The Great British team had won just one gold medal in cycling. In the 10 years between 2007 and 2017, that total shot up to 67.
“The whole principle came from the idea that if you broke down everything you could think of that goes into riding a bike, and then improve it by 1 percent, you will get a significant increase when you put them all together,” stated Sir Dave Brailsford, General Manager at Team Sky at the time.
Step forward to 2023, and the question is, could that same theory prove as fruitful in the adviser technology sphere today?
In simple terms, I believe it can. Moreover, I believe it to be part of the answer to solving the advice gap.
One area that can benefit from such a movement is the ongoing pain-point that many financial advisers experience; this being the copious amounts of time wasted re-entering and re-keying the same information across a variety of different systems.
In some cases, this must be done as many as seven times across a financial advisers’ back-office systems when considering a firm’s client profiling tools, client portals, cashflow planning software, investment research software, platform and client reporting solution.
Many advisers have said that they long for the day that a single advice environment exists – one situated either under one roof or via closely integrated systems – so that advisers can select their preferred combination of tools to best suit their business.
Yet the answer to this issue, in some cases anyway, may already be there. By using existing integrations available today, financial advisers can save many hours of wasted time; with stats showing that up to 68% efficiency can be gained today by implementing such an approach.
So where can advisers potentially see these gains?
The goal is clear, but like the British cycling team, the means to the end is created by understanding each step in the process and creating incremental efficiency gains.
These gains can be made by streamlining, simplifying and automating the process across six key points where systems need to connect throughout the advice journey.
The first of these is that advisers who integrate their back-office systems to their client facing tools have – on average – 32 more clients than those who don’t. This is based on data from our own systems. That not only equates to a good deal of time saved on their existing clients, but also creates the potential to build their client base much further with their new-found “free time”.
The second point is that advisers who use digital client onboarding processes and an online portal –when they digitally engage with clients – on average, save between two and four hours per client. At a minimum, it’s a whole day’s worth of saved time for every four new clients a firm has.
The third point is that data is re-keyed across risk profiling and investment research software. With the average adviser having 112 clients, one hour of re-keying time per client equates to three working weeks per year. 50% of the 1.1 million portfolios analysed within our systems every year are manually keyed in - at an average of 15 minutes per task, that’s £20 million of adviser or paraplanner time!
More work is required to ensure that advisers know what is available to them and to support integration adoption, and there is no doubt that adviser technology providers need to build more, but there is a good amount available already today which is only used by approximately 30% of adviser firms.
The fourth point is that PDF reports and regulatory documents are often manually saved and uploaded into the client record/CRM system; creating further efficiency opportunities. By adding documents to our open APIs, we will be able to remove another layer of complexity. There is more work required to connect the dots here, but, again, it's on the right path.
Point five is that platforms with straight through processing capabilities remove the need for re-keying client, product and investment details, saving further time. Again, it may only be 15 to 30 minutes per client case, but it’s the frequency of the repetition that adds up.
The last point is that NextWealth found existing clients who use a client portal require one hour less time per annum to produce their annual reports. Confirmation of suitability is an area that generates a huge amount of work for adviser firms (on average 4.9 hours per client, per annum). This means that, by my calculations, the industry is spending around £2.2bn of adviser time on manually aggregating data sources and documents. Time and money that could be better spent!
The benefits are clear to see and by making small, cumulative changes – over time – adviser and their clients could see significant benefits to their long-term success stories.
Join us on 11 May
Steve Mitchell will be speaking at an FE fundinfo event for advisers in London on Thursday 11 May 2023 where he will look further at what does the tech-enabled adviser firm of the future look like? The event will explore how advisers can match the needs of their business and clients to technology and discuss what innovations in financial services technology and integrations could change the advice process for the better. For more information on this event, please click here.