The future of advice technology
Nick Eatock, CEO, intelliflo
Technology development is often incremental. If you switch your smartphone to the next model, you probably won’t notice a big difference. But if you leave a few years between upgrades, the features and performance are likely to be significantly better.
The same is true for advice technology, you may not see huge change on a day-to-day basis, but when you look at where we’ve come from, the difference is remarkable. When intelliflo was established twenty years ago, most advice was linked to commission, products were central to firms’ propositions and technology was largely seen as a way to improve record keeping. Today, advice is about financial planning focussed on the client’s individual circumstances, needs and objectives, and practice management systems are at the centre of the advice journey.
Even in the last five years, advice technology has progressed to improve efficiency through straight-through processing with deeper integrations and standardised API connections between systems. Not that long ago, the marketplace was talking about 100 clients per adviser as the norm for quality, personalised advice.
Now across our customer base, which covers around half of the UK advice sector according to Nextwealth, we’re seeing firms that have embedded technology into their advice process providing consistent, high-quality advice to around 200 clients per adviser on average.
Future-gazing
If we’ve come a long way in the last five years, I think the next five will bring even more significant change. At intelliflo, our mission is to widen access to financial advice and with the ongoing enhancements and innovation we see coming down the line, who knows how many more people will benefit by 2029 as advisers further expand the number of clients they manage, while continuing to build strong trusted relationships with their clients.
Embedding effective, efficient technology throughout the advice journey is crucial to meeting the needs of a growing client base, but in our recent marketwide research, we discovered the average adviser spends one whole month of every year just implementing plans on disparate platforms.
At an average hourly rate of £150, that’s an incredible £24,000 per adviser lost each year due to fragmented technology. On top of the frustration and wasted time, we also found that errors occur in 20% of client onboarding processes due to rekeying data between systems and the ‘swivel chair’ effect, where you’re constantly logging in and out of different parts of the advice journey.
We’re working to change that by creating joined-up technology that delivers real operational efficiencies. Our integrated open architecture investment platform wealthlink means you can now deliver the whole advice journey and manage your clients’ financial plans on a fully featured platform without ever leaving the intelliflo office environment.
The intelligent integration between intelliflo office and the modern, paperless investment platform from SS&C provides everything you need to set up and maintain your clients’ investments. So there’s no rekeying, fewer errors, less reworking and better outcomes as a result.
We launched wealthlink in the US about 18 months ago and it’s now used every day by thousands of advisers. The results are startling: intelligent data collection and the removal of paper processes have led to a fall in submission errors from 50% to 1% and reduced account opening times from five to seven days on average to 15 to 20 minutes.
We’re now working on expanding wealthlink to include other partners in addition to SS&C, and I hope that our work in this area will also spur other providers to deliver more of these integrated journeys for the benefit of the whole profession.
Learnings from other industries
If we just take a look at other sectors, you can see what is possible when you embrace technology. Firms like Amazon have revolutionised how we buy many products, but although many high street brands have suffered as a result of the global etailer’s success, others have thrived. Waterstones for instance has capitalised on the in-person book buying experience and given local shops greater autonomy over how they are run, but it has also strengthened its use of technology to better manage inventory, improve forecasting and reduce costs within its supply chain.
I see this happening in financial advice too. While many firms will continue to offer a more bespoke proposition, likely aimed at clients at the higher end of the wealth spectrum or those with more complex needs, technology will be crucial in supporting human advisers in the advice process and enhancing the client experience. At the other end of the spectrum, I think we’ll see larger mass-market offerings which will leverage technology to a far greater extent to allow much wider access to advice.
I don’t think these big players in financial advice will be the likes of Amazon and Google though. The risk versus the reward doesn’t seem attractive enough for the tech giants to enter the sector directly. But I could certainly see the infrastructure from large technology companies extending further into the advice world. It makes much more commercial sense for these technology firms to create solutions that can be applied to any industry and then allow third parties to use those capabilities to build what is needed in specific sectors.
I think this is particularly true of the AI technology currently being developed, which will become far more prevalent, not just in our sector, but in all sectors. We’re already seeing AI used in the advice process for note-taking during meetings and report writing, but I think that’s just the start.
Building an AI ecosystem
At intelliflo, we’re striving to create an AI ecosystem, where firms can choose sector specific tools that support advisers throughout the whole advice journey. We already have several integrations via the intelliflo store with AdviceTech firms offering AI solutions. For instance, Model Office, which uses AI to deliver compliance support, and RecordSure, which is built on AI technology and provides speech and document analytics for review purposes, and we will be adding many more AI vendors in the coming months.
We’re also bringing AI directly into intelliflo office, as announced at the intelliflo innovate 2024 conference. With our partner Aveni, we’re working on a deep integration that will automatically record, transcribe, summarise and compliance check meetings, using the data to auto-fill client details and storing all recordings and documentation within intelliflo office. And we’re creating intelliflo video in partnership with Money Alive which will provide clients with personalised videos and interactive tools via the personal finance portal.
Moreover, we’re looking at how we can leverage the huge resources and investment our strategic technology partner AWS is making in AI. For instance, we’re exploring how we can use natural language searches and generative AI to help locate information more easily within intelliflo office. This work continues behind the scenes, and we’ll let you know more once we have a solution that we’re confident fully addresses adviser needs.
The potential for AI to deliver better data analysis, clearer insight, and greater personalisation to improve the advice process for both advisers and clients is enormous. Although advice is highly personalised, there are also a lot of commonalities between clients. Using AI to understand those common factors, could certainly help extend the reach of low-cost advice.
The power of people
I’ve heard people talking about AI as a route for staff cuts in advice firms, with paraplanners flagged as particularly at risk, but I think that would be a huge mistake. I see the role of AI more in augmenting the human element of advice and enabling firms to scale cost-effectively.
In financial advice especially, experienced staff are our primary asset and paraplanners have driven hugely beneficial and positive change in our profession in recent years. Instead of replacing people, I believe technology should take some of the chore out of certain tasks and allow humans to focus on the aspects of the role that are most highly valued by clients and difficult to replicate with AI.
The level of human contact may vary depending on the advice model, but when we’re talking about investing their life savings, a pure AI experience will be difficult for many people to trust. Understanding the value of advice and being reassured that the financial decisions are the right ones, is vital to encouraging people to take advice, and forms an important part of the human relationship element of the advice process.
The future of advice
Much of how advice looks in future will be driven by the FCA’s work on the advice guidance boundary. While we have had proposals in this space before, this time it feels a bit more realistic. We’ll have to see how the consultation plays out and any new regulations will take time to come to fruition, but hopefully, we are at the start of radical change.
If all these changes come together, we’re going to see a world where advice becomes more accessible. Whether it’s simplified advice, scaled advice through AI, or more traditional advice supported by technology, ultimately it all comes to the same point: more people recognising the value of advice and receiving help with their long-term finances. That’s a future we can all look forward to.