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Advisers embrace technology, lack budget

Financial advisers have dramatically relied on technology over the last 18 months yet are unwilling to increase their budget to improve the clients' digital experience, new research finds.

The 2021 Netwealth AdviceTech Report found advisers spent 7.9% on their tech outlay as a percentage of revenue two years ago but spent less in 2021 at 7.3%.

One example of advisers rapidly adopting technology is in the use of online meeting and digital signature tools, which increased since the onset of COVID-19. Some 75% of practices now use online meeting tools compared to 45.7% in 2020. In terms of digital signatures, 56% of advisers are currently using these tools compared to 32% in 2020.

"Advice firms have largely tried to replicate their existing customer interactions to online, but if we look to the disrupters for inspiration, replication may not be enough. Digitisation of the client/adviser relationship will need to consider new channels, like client portals and online self-service tools," the report said.

Advice firms used 14 applications on average, covering client engagement, financial advice and the workflow and processes. However, advisers are not spending more on technology.

Other technology-related support advisers adopted in the last 18 months include websites responsive to mobile phones (81.9% up from 77.6% in 2021); educational email newsletters to clients (71.3%); social media (60.6%); and use tools and calculators such as retirement calculators (64.9%).

Those advisers that successfully deployed technology in their practices are likely to have a dedicated in-house technology manager (33.3% vs 17.5% overall), a dedicated technology budget (31.1% vs 16.1% overall) and have a technology roadmap for the next 12 months (73.3% vs 55.5% overall). These practices are also evolving their digital experiences in the education and content marketing space.

Netwealth also found that client portals are the "next frontier, and a very real path for advice firms to reinvent their client experience to rival many disruptive digital first wealth business", promising a dynamic, intuitive experience that is user- and mobile-first.

"Many advisers agree. Today almost one in three (27.9% from 22.0% in 2020) advice firms have a client portal with another one in 3 (35.1%) planning to get one in the next 24 months," the report read.

"Client portals evolve the client-adviser relationship beyond in-person interactions. They provide an always-available and omni-present reminder of the adviser, evolving the relationship from physical to truly digital."

Read more: Netwealth