Navigating the current climate: what role can technology play?

The current economic climate has put pressure on financial planning practices throughout Australia and around the world — there is little doubt about that.

For those running financial planning firms, from the small to the large, they are facing a balancing act between revenue coming through the door and costs flying out the window. At this time many advisers are trying to decide which category software fits into — is it driving revenue or creating a cost?

The boutique financial planning firms that we talk to on a daily basis are seeing a decrease in their revenue driven by the current conditions, causing them to seek out new lines of business. The current environment has also seen sector specialists, such as mortgage brokers, feel the squeeze and make the move into a broader financial planning role.

I believe technology has a role to play for firms of all sizes in meeting these challenges. The current conditions have the potential to shape the future of the financial planning software industry, both in the way advisers use it and the role they see it playing in the growth of their business.

Smaller firms have less people power and generally less revenue lines. However, they are light on their feet and have the ability to adapt as conditions change.

Technology is already assisting these businesses to access additional lines of revenue generation.

As an example, the awareness of, and demand for, risk products from clients has seen some non-traditional risk writers move into this field in response to client demand.

Technology can help track applications, store data and flag when medical assessments are required, and for those who have never done it before, this can bypass a minefield of paperwork and administration. If a new line of business is going to eat up all of your time, its ability to generate revenue soon disappears. If technology can streamline the process, you have a cost and time efficient revenue stream that expands your ability to grow your client base and client service offering.

For firms at the larger end of the scale, not only is risk management a big priority that automated processes can help with, these automated processes are also saving time and considerable amounts of money. For most, risk means admin and admin means time.

In addition, with so many planners, all with their own preference for how to do things, consistency can be a key issue for larger firms.

Storing client data in the same way, generating reports using the same format and interacting with clients in a consistent manner has become a major priority.

Importantly, workflow management systems and tracking applications enable practices to deliver consistently to the service level agreement established with their clients. And, when everything else around their investments is changing rapidly, this can give clients confidence in the strength and reliability of your service.

Having streamlined processes, reporting and formats throughout your business can also help a practice outsource key tasks to external service providers like paraplanners and ensure they get a consistent format returned.

This is another cost saving method that many-mid tier firms have discovered during the past two years.

Using external providers can save you time and money, and using technology to help you ensure consistency enables you to maintain the same high standard of service your clients are used to receiving.

The current financial landscape has, more than ever, placed a spotlight on the value clients are receiving from the fees they are paying their planners.

Therefore, how financial advisory practices articulate their value proposition to clients has become crucial.

As a result, increased importance has been placed on the marketing of firms and considering how integrated campaigns using different media can be effective in driving home a key message.

No longer can advisers rely on a buoyant market and soaring share prices to bring in new interest or keep their current clients content.

Advisers are opening themselves up to new technology and new media, including blogs and podcasts, along with more creative initiatives with the standard e-mail.

This is a time when advisers are not only seeking to simplify the whole planning process, they are also seeking to maintain the frequency and standard of their communication with their greatest asset — their client.

Many clients are now going through the process of reassessing their investments, re-thinking their aims and considering their risk profile. In many cases they will emerge from the current environment ready for a fresh start. This can be the same case for a financial planning practice that takes this opportunity to reassess its client service procedures, re-think its processes and consider new revenue sources.

There are many non-product or organisationally-aligned practice consulting firms that can approach your business without an agenda in mind and take a realistic view of what’s happening. Once you have a clear picture of where improvements can take place, the solutions are much easier to find.

While some may view technology as a cost, there are financial planning practices out there using technology to save costs and drive revenue. The capability is there; it is up to you to decide how you use it.

Darelle Jenkins is managing director of Coin, a subsidiary of the Macquarie Group of companies.