Advice firms encouraged to broaden tech usage
The use of technology and data analytics will be a way for successful advice firms to grow in 2025, according to Adviser Ratings.
Referencing findings in its 2024 Adviser Landscape report, it said those tech-savvy practices operate with 55 per cent fewer staff and achieve a minimum of 10 per cent higher profit margins than less tech-savvy ones.
Similarly, the use of data analytics in their daily operations allows practices to report 15 per cent higher revenue per client and improved retention rates than traditional segmentation methods.
This includes using it to identify ideal clients, for optimisation purposes, to predict peak demand and to automate routine tasks.
With this in mind, the firm said advice practices should be considering:
- Whether their current technology stack supports their growth ambitions.
- If their client engagement tools meet evolving client expectations.
- How they can leverage data analytics to drive better decisions.
- How AI could enhance their operations.
“The financial advice profession is at a pivotal moment. The combination of regulatory reform, technological advancement, and evolving client needs creates unprecedented opportunities for practices willing to embrace change.
“Those who take time now to reimagine their operations – from advice delivery to technology adoption to client engagement – will be best positioned to thrive in 2025 and beyond.
“The practices that embrace this opportunity to reimagine their operations will not just survive but thrive in the years ahead.”
Last November, Money Management wrote how wealth managers are using disruptive technology such as artificial intelligence, data analytics and cloud infrastructure to deliver personalised advice.
According to PwC’s global Asset and Wealth Management (AWM) survey, this disruptive technology is allowing wealth managers to reach the mass affluent demographic, open up new value propositions, and sharpen competitive relevance.
The mass affluent demographic is forecast to grow from US$96.3 trillion in 2023 to US$408.2 trillion by 2028.
More than seven out of 10 firms surveyed said they believe disruptive technology will lead to a shift in consumer preferences towards technology-enabled solutions. It can also improve client profiling, analysis and insight to allow advisers to focus on face-to-face time with clients.
This is particularly the case for the younger digital native generation who seeks a technology-driven, engaged approach from their wealth manager. PwC said it is worth it for wealth managers to pursue this generation as they will be beneficiaries of the intergenerational wealth transfer.
AUTHOR
Laura Dew
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