Driving Automation in the Financial Advice Industry with Data Capturing

Written on
byChisimdi Nzotta
financial advice data capturing

The present day financial advice industry has seen little innovation since the turn of the last decade, but is now entering a period where it will be fundamentally disrupted. 

 

The industry has relied on historically high margins, slowing down change and is  laggard in terms of adoption of digital technologies. There has only been incremental improvements to client reporting systems, digital planning tools, platforms, CRM systems, and digitising data capturing processes, for example. 

 

Margins are now being compressed – a 10% decline since the GFC according to PWC – and new technologies will drive changes across all facets of the industry. The trend towards PE backed adviser consolidation and vertical integration, to enable the capture of more fees across the value chain, does not resolve the structural inefficiencies and lack of scalability inherent in wealth management businesses. This has diverted focus from the real issue and the next major challenge for the industry: operational efficiency and the provision of high-quality service to the masses in the post-pandemic 21st century.

 

The pandemic brought forward the use of digital infrastructure by a decade. The widespread adoption of video conferencing (VC) has fundamentally transformed the way advisers can serve clients. Financial Advice firms report that pre-pandemic, over 90% of their business was done face to face and 10% over VC/Phone, now some advisers report that 80% of advice is delivered via VC. This new normal is driven by client demand. There is a clear trend emerging for introductory meetings (fact find, presentations) to be done in person and ongoing service to be done via VC. Regional advisers can now market as national advisers. 

 

This presents a significant, untapped opportunity for Financial Advice. Capturing the data in a client meeting through recording, can be used to power a new era of automation and introduce data-driven technologies that have been previously unreachable for financial advice. A client meeting contains the data that drives post meeting processes, from administration, to compliance testing, adviser competency, and suitability. Models can be trained to replicate these processes and effectively remove all low value administration, allowing Financial Advisers to focus on what both they and the client value, building great relationships and coaching clients through their financial futures. 

 

The key operating model challenge is consistent data collection. If data capturing processes are centralised and consistent, a significant amount of activity across the financial advice process can be automated. This poses an interesting challenge for the partnership model. Partnerships have typically struggled to establish consistent processes across partner firms often resulting in differing standards in data capture and consistency. The adoption of data driven technology will start to drive a wedge between the two models in terms of cost to serve and operational efficiency.

 

It’s expedient to adopt machine learning and other data driven technologies at the heart of human centred advice, delivering scalability, operational efficiency and service levels completely out of reach of traditional operating models. 

 

Find the full details about adopting this approach in this paper.

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