On an upcoming episode of Relative Return, chief executive of Intelliflo, Nick Eatock, has discussed the firm’s official launch of its software into the Australian market.
The firm, which provided practice management technology, was founded in the UK but officially launched in Australia this year after two years of preparations.
“There’s a lot of similarities between the advice market in the UK and Australia, so that’s great, but there are some differences as well, and we wanted to understand those differences, get under the covers and make sure that we’d configured and localised the solution for the Australian market as best we could. So, we wanted to get it right rather than do it quickly, so that’s why we took those two years to get it right,” Eatock said.
In the UK, the firm held a 46 per cent market share and serviced around 30,000 advisers and paraplanners, representing around 4 million actively serviced clients.
Its product was a software as a service (SaaS) that Eatock said allowed the firm to move and enact changes to the product quickly in line with customer needs.
He also discussed how advisers may be reluctant to engage with new technology or lack the time to get to grips with it unless they had a dedicated chief technology officer.
“I mean, if you’ve got a CTO, that’s fantastic, but you don’t necessarily [need one], particularly for a small business. Very often, it can be someone who’s in operations, it can be an office manager, someone who actually has identified an important part of their role is about maximisation of the adoption of technology,” Eatock said.
“But fundamentally, you’ve got to decide as a business, what kind of advice business do you want to be? What are the things that you think you could do better? And being really honest about that, and that’s something that every business should address on a regular basis. Change is constant, so you’ve got to ensure that you’re keeping on moving.”
Retail Distribution Review
Eatock also referenced the UK’s Retail Distribution Review (RDR) that was enacted at the end of 2012. Similar to Australia’s Hayne royal commission, it fundamentally changed the advice industry and saw a move from commission-based advice to one that charged fees.
“The concept of moving to fee-based advice and asking your clients to pay a fee, making it very, very clear, was welcomed by some but feared by others. And what we saw, just before RDR went live, in the two, three months beforehand, the advice numbers dropped dramatically, just as they have done in Australia with the royal commission and so on,” Eatock said.
“But what happened as a result of that was that, actually, advisers ended up having good conversations with clients. The reality was that clients were very accepting of the approach, so I didn’t hear a single adviser actually say that they’d had a challenge. But what it did mean was that advisers needed to be much more effective with their time.
“One of the downsides at that point was actually that it narrowed the scale of the advice in terms of the numbers of clients reached with advice, but it did mean that that advice was much more transparent, much more measurable, much more involved, and advisers turned to technology to do that. Technology became the enabler to enable advisers to get out to their clients and provide the service they did.
“So, essentially, it ended up becoming a good news story.”
While he acknowledged that, like Australia, there was still an advice gap, he said it was narrower than pre-RDR as advisers had moved to service more clients.
“When you paint that against the Australian market, I think exactly the same thing is happening, just a years down the road. We’ve seen the adviser numbers drop significantly, but we think that they will bounce back,” Eatock said.
This was a benefit of being able to use technology to provide advice efficiently and effectively to people who sat outside of the top end of the wealth spectrum.
“It probably hasn’t gone far as I would like it to go, but it’s definitely trending in the right direction. So I think, as we see in Australia, as we come out of the next year or two with the Quality of Advice Review and so on, then I think what we will see is, through the access of choices of technology systems for advisers in Australia, and hopefully those advice tools that are better integrated together, I think we’ll see that advisers are able to actually service clients, investible assets below where they’re currently are,” Eatock said.
