In the summer, I seriously considered replacing my iPhone 14 with an old Nokia 3310 – a phone you can use to text, make calls and play Snake.
But then I remembered how heavily I rely on Google Maps. And how I need email and Microsoft Teams on my phone for work. Also, it’s so much more convenient to keep train and plane tickets on my phone, and use Apple Pay to buy things. And to have a camera to hand at all times. The list goes on and, needless to say, I kept my iPhone.
The (slightly worrying) reality is that technology has become integral to everyday life for most people in the Western world.
And yes, it’s great… when it works.
But last night, I was trying to get an article finished for today and my computer would not play ball.
First, Microsoft Word froze up and wouldn’t let me write anything, then the CMS went down so I couldn’t load anything onto the website.
I regained access to both, but my emails wouldn’t open and then the whole laptop shut down without warning (it’s a good thing I’m an obsessive saver).
In the end, it took me about an hour longer than it should have to complete my article.
Obviously, without technology, I wouldn’t have been able to complete the task at all. But that didn’t make it any less irksome when the technology slowed me down.
It’s a frustration shared by advisers.
Currently, only one-fifth are satisfied with their tech stack and not looking to make a change, NextWealth’s latest Financial Advice Business Benchmarks report, published today (22 October), suggests. This is the lowest level since 2020.
A major frustration for advisers is the inefficiency of existing technology in streamlining business processes.
NextWealth managing director Heather Hopkins says innovation in tech can be a “critical driver” of business efficiency. Yet only 21% of respondents are fully confident in technology innovations to make their lives easier.
In the report, respondents express the need for faster systems and better integration capabilities to enhance overall efficiency.
The report suggests that growth firms are those most likely to be looking to make a change. Around 39% of respondents from growth firms are looking to change their tech stack, almost 17% higher than the rest of the market.
NextWealth suggests that, as growth firms are focused on hiring staff and seeking new clients, it is possible to deduce that these firms are ‘particularly discerning’ of solutions that enable them to streamline activity in meeting growth objectives
But there is still a long way to go when it comes to using technology to deliver efficient advice.
“In spite of new ways of working and huge advances in tech, there has been no improvement in the time it takes to deliver advice to a new client,” says Hopkins.
“It still takes an average of 33 days to deliver the first piece of advice to a new client. This is something I really hope we see change in the near future.”
Many advisers believe that current tech solutions are not effectively addressing these operational challenges. And almost a third say they will add or cease working with a tech partner in the next year.
This change, says NextWealth, is driven by a desire to improve business efficiency and to adopt artificial intelligence.
AI has been in development for some time now and is undoubtedly on the radar of financial advice firms, the report says. But attitudes remain split, and the benefits and limitations of AI can lack clarity.
For example, the Financial Conduct Authority has made it clear that it wants firms to embrace AI, but it hasn’t yet set out how it can use it.
Speaking at The Verve Group’s Evolution 2024 conference last month, Iress head of relationship management – wealth UK Gareth Williams said firms in the financial services sector now face a “Catch-22 situation” when it comes to adopting artificial intelligence due to the messages from the regulator.
At the end of August, research from the CFA Institute showed that the vast majority (85%) of investment professionals believe there needs to be industry-wide standards and ethical guidelines for AI use. 82% said the lack of such standards hinders faster adoption.
Overall, 47% said their business is not well prepared for potential regulatory changes regarding AI.
But they need to get prepared, because this is something the regulator is pushing for.
Last week, it launched the AI Lab – a new initiative, to help firms “overcome challenges” in building and implementing AI solutions and support the government’s work on safe and responsible AI development.
NextWealth’s FABB report suggests the appetite to engage with AI is strong among financial advice professionals. Around 28% say they are currently using AI, up from 5% year-on-year.
In verbatim feedback, almost a fifth of financial-advice professionals (18%) explicitly said they had changed their tech stack to incorporate AI-based solutions.
Meanwhile, almost two-thirds of financial-advice professionals are not using AI but do consider it an area to watch (up from 44% in 2023).
The view that AI is not fit for purpose has decreased from 29% in 2023 to just 7% this year, reinforcing the overall picture of an increased perception of relevance.
As demonstrated by my nightmare with my laptop yesterday, there is only so far technology will take you. And there is only so much advisers can do to make their own businesses efficient before having to rely on others.
One-third of respondents to NextWealth’s survey said that gathering data from providers is the lengthiest step in the process of delivering advice.
There has been no meaningful change in this metric since 2021. Additionally, 8% more respondents say that getting data from the client is the lengthiest step.
“While tech can make advice businesses more efficient, these firms rely on providers to share data,” says Hopkins. “Tech isn’t the only solution.”