The vast majority of financial advice firms which are fully embracing and adopting new technologies are reporting an annual revenue north of $1 million.
Netwealth’s 2024 AdviceTech report surveyed over 350 advice firms to examine how they are deploying technology.
The research found that 23 per cent of practices fall into the top cohort of technology adoption, classed as those which are strategically leveraging both emerging and existing technologies to drive business transformation and gain a competitive advantage.
These advice businesses are focused on continuous innovation and have a documented digital strategy for the medium to long term, the report wrote. Nine out of 10 of these firms are using 15 different technology items within the business.
As a result of their strong adoption, these practices tend to have a higher level of revenue. Netwealth found that 81 per cent of these firms reported more than $1 million in revenue for the year ending 30 June 2024.
One-third of this cohort also enjoyed an EBITDA rise of 11 per cent or higher in the last financial year. Moreover, just under half of these practices have $500 million in funds under advice and 42 per cent have above 500 clients.
The findings align with data from Adviser Ratings, which uncovered earlier this year that the 73 per cent of advice businesses that use technology tools in their processes report profits of 10 per cent and above.
Netwealth’s report also examined how these top technology adopters are specifically deploying artificial intelligence (AI), with seven in 10 saying they are using, piloting or have some limited use of AI today.
The top uses of AI in these advice practices are summarising client meetings (64 per cent), content marketing (43 per cent), back-office automation (43 per cent), client review process (30 per cent), and to help prepare the financial plan or statement of advice (21 per cent).
Money Management previously reported on new AI tools designed for advisers which can create professional file notes, fact finds, presentation of statements of advice, and review meetings.
Speaking on a recent webinar hosted by Iress and Deloitte, Kelli Willmer, executive general manager of wealth at Iress, encouraged advisers to continue evolving with new technologies.
“That’s my recommendation to advice practices: continue to evolve processes. The advice industry is a very traditional one and has been for a long time. It is evolving through regulation and compliance, but there is always an opportunity to refine processes – a lot of them are in place because that’s the way it’s always been done,” she explained.
“Tech can probably take away two, three, maybe five steps of those processes going forward. Through automation, you can actually know where to look and determine the areas that need enhancement in the practice and the areas that are going to add value through the whole advice chain.”
