‘One Jenga piece away from collapse’: Fragile data systems hindering advice
Financial advisers are spending over half of their time on product implementation and administration alone, thanks to inefficient data processes.
The research, which was released by fintech elemnta and conducted by Marshan Consulting, found that data fragmentation and lack of standardisation in advice practices is preventing the delivery of scalable and efficient financial advice.
“The data, systems and information that underpin Australia’s wealth management and financial advice industry is one precarious Jenga piece away from the edge of collapse. Each missing or mismatched piece weakens the structure, leaving the entire foundation increasingly unstable and unable to progress,” the report described, titled A Fractured Foundation: The Critical Issue Holding Back Australia’s Wealth Ecosystem.
As one adviser described in the paper, maintaining data accurately across multiple systems – which often do not integrate with each other – is one of the largest challenges that advice practices face today.
This includes manual data entry across multiple systems at various stages of onboarding, complex product application and form-filling processes, and lengthy data verification processes due to lack of consistent client data sources.
As a result of this, elemnta’s research highlighted that advisers are now spending less than half of their time on actually producing advice.
While advisers would previously spend approximately 65 per cent of their time producing advice and 35 per cent implementing it, this ratio has now flipped to advisers spending just 43 per cent of their time producing advice and 57 per cent on product implementation and administration.
“One of the most severe trickle-down effects of this fragmentation is inefficient product implementation and maintenance. Our analysis reveals this as one of the most extreme pain points for advisers.”
The report added that this is inevitably causing a downstream impact on the overall client experience, as some advisers are forced to spend greater time and effort on administrative tasks.
“These groups express frustration at having to provide the same information multiple times, largely due to the lack of data portability between their customer relationship management (CRMs) and internal software solutions and financial institutions.
“In an environment where clients expect timely service and real-time access to financial information, the time-consuming implementation processes further complicate adviser/client interactions.”
To help solve this issue, elemnta encouraged advice practices to invest in outsourced infrastructure that enables seamless connectivity among various data sources, instead of attempting to construct this in-house.
It explained: “Rather than investing significant capital in building out their own patchwork systems, businesses can tap into a more advanced and pre-established infrastructure, and in turn focus their capital closer to their customers.”
The technology firms that will be a winner are those which are easy to work and do business with by being able to ease this specific pain point, it said.
The research echoes recent findings from Insignia Financial. Presenting at its investor day event, the wealth management firm noted that it currently takes up to 20 hours to generate advice per client.
This can mean the total advice process takes up to six months consisting of fact finds, generating advice, presenting advice to the clients, implementing advice and supervision. As a result, only a fraction of time is spent with the client.
Insignia is now looking to improve this by investing in its technology ecosystem to reinvent its advice process and uplift productivity.
According to Adviser Ratings last month, a key element of successfully scaled advice structures is strategic use of technology and digital tools to reduce manual work. This includes automated data collection and streamlined compliance processes, enabling advisers to focus on the parts of the advice process that requires human interaction with the client, rather than lower-value tasks.
AUTHOR
Jasmine Siljic
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