When AdviceTech meets InvestTech

By Jayson Forrest - Managing Editor  - IMAP Perspectives

IMAP's InvestTech 2022 COnference  Advicetech meets InvestTech

Speaking to an audience of around 200 at the IMAP InvestTech 2021 virtual conference, the CEO of WealthO2, Andrew Whelan, outlined the role technology can play in enabling advice practices to achieve scale and efficiency, while reducing many of the common causes of stress for advisers.

Regulatory and compliance demands remain the leading contributors of stress for financial advisers, with 82 per cent of practitioners saying they found these demands ‘highly’ to ‘very highly’ stressful.

This was one of the key findings to emerge from ‘The Australian Financial Advisers’ Wellbeing Report 2021’ - a first of its kind study into the health and wellbeing of Australian financial advisers conduced by The e-lab and Deakin University, and sponsored by AIA Australia.

The findings from over 700 practitioners who participated in the survey provided some concerning insights on the health and wellbeing of advisers, including:

  • 73 per centof advisers are experiencing high levels of burnout from work;
  • 67 per centof advisers experience some level of depression, with 17 per cent reporting they were depressed most of the time or all of the time;
  • 61 per centof advisers have poor sleep due to stress;
  • 33 per centof advisers are seeking medical care to manage their health symptoms caused by work stress;
  • 51 per cent of advisers experience stress in relation to education requirements; and
  • 48 per cent found revenue and business expenses to be highly stressful.

As a result, 42 per cent of the practitioners involved in the study indicated they were considering leaving the profession due to the stress, while 17 per cent reported they were unsure if they would stay in the profession.

It was against this backdrop of adviser health and wellbeing that the CEO of WealthO2, Andrew Whelan, discussed the role that technology can play in relieving many of the stresses experienced by both advisers and advice businesses. 

Speaking at InvestTech 2021, Andrew believes that many software providers and platforms do not do enough to help alleviate the stresses of advisers, particularly in relation to compliance, business performance and profitability.

“Many of these adviser and business stresses should be of concern to technology providers. However, most have not yet been able to introduce the type of efficiencies into advice practices that can help reduce these stresses,” Andrew says.

Andrew refers to a statistic where most ‘typical’ advice practices with over $500K recurring revenue are currently operating at around 25-30 per cent EBIT, when they need to be operating at over 40 per cent EBIT, just to maintain the valuations of several years ago. He concedes that for advice businesses to operate at over 40 per cent EBIT is a significant shift for the industry.

“This means that to achieve a 15 per cent increase in the profit bottomline, the way in which advice practices need to operate has to significantly change,” he says. “And that’s where technology comes in to enable this change.”

To help address this situation, WealthO2 is currently engaged in strategic work and development that it hopes will “completely change the game in the technology and platform space, and hopefully stop the alarming exodus of advisers from the industry”.

 


Many of these adviser and business stresses should be of concern to technology providers. However, most have not yet been able to introduce the type of efficiencies into advice practices that can help reduce these stresses

Andrew Whelan
Project Bullseye

Taking up the technology innovation baton to address the many stresses and challenges facing advisers and advice businesses, Andrew used the InvestTech 2021 conference to reveal ‘Project Bullseye’ - an initiative WealthO2 has been working on.

The initiative involves WealthO2’s recent acquisition of ROAR Software (formerly YTML) - a simplified and centralised technology platform for financial service businesses.

“We have been working with ROAR Software to create a new technology stack-based financial planning process, where you can go from an online fact-find, through to modelling, generating the SOA, through to the authority to proceed, and then implementation, where transactions and rollovers take place. That’s what we’re working towards,” says Andrew.

“This tech stack will seamlessly allow the adviser to deal with everything they have to within the advice process, as well as enhancing the workflow of advisers.”

Some of the features of this new tech stack include:

  • Client/investor creation - A new set of public facing APIs that will receive data to facilitate the pre-filling of the onboarding process;
  • Onboarding and account creation - Allows advisers to complete the onboarding process within WealthO2 using the new ‘onboarding experience’ that intuitively guides the adviser through what is required to establish an account;
  • Implementation of advice and data flow - Advisers can implement the approved advice via WealthO2’s rebalance engine. Data is then sent back to the adviser to facilitate reviews and tracking a client’s goals;
  • Identify client goals - Enable advisers to identify goals with the client and then track these goals over the short, medium and long-term; and
  • Optimise client outcomes - Appropriate strategies for the client can be compared and optimised to match their specific goals and objectives.

“This completely new tech stack will not only combine a platform, but allow advisers to sit with clients and immediately identify and model specific goals with the client, while allowing them to show their clients precisely how long their capital will last. This will enable advisers to better optimise strategies for clients,” Andrew says.

“Once that strategy is complete, advisers can then transfer the results and their recommendations into, what we believe is, the most presentable version of an SOA that is available in the market. Once the client has provided their authorisation, it’s only a matter of clicking a button for straight-through processing onto the platform.”

As part of this new technology stack, WealthO2 has introduced a human avatar onto its system, which is ideal for lower balance clients, who may not need a full advice service. By introducing this element, Andrew says advisers don’t need to personally be with their clients to deliver their advice. Instead, advisers can deliver their advice through the fully automated human avatar and the ‘dynamic docs’ that are available with the technology.

“This human avatar will be able to present the SOA on an adviser’s behalf. The client can still ask the avatar questions, which are all captured for compliance requirements. Once the client is happy with the advice and signs off on it, it’s simply a matter of clicking ‘go’ for straight-through processing onto the platform. It’s that simple,” says Andrew.

He adds that WealthO2 is currently developing its avatar technology to intuitively learn, which will enable this technology to increasingly present more detail to clients with respect to the SOA, including product replacements and other elements that are unique to the SOA.

“We believe these features will make a huge difference in terms of scaleability of an advice practice, alleviating many of those adviser stress points identified in the ‘The Australian Financial Advisers’ Wellbeing Report 2021’,” says Andrew.

We have been working with ROAR Software to create a new technology stack-based financial planning process, where you can go from an online fact-find, through to modelling, generating the SOA, through to the authority to proceed, and then implementation, where transactions and rollovers take place. That’s what we’re working towards

Andrew Whelan
Intergenerational planning

However, a statistic from Andrew Osterland (a business writer from CNBC) that particularly worries Andrew is the estimated 80 per cent of client heirs who will look for a new financial adviser after inheriting their parents’ wealth.

He believes that for the continuity of the industry, financial advisers need to be looking at different options to keep the children and beneficiaries of clients - potentially new intergenerational clients - engaged them and the financial planning advice process.

One of the areas WealthO2 is currently investigating is ‘gamifying’ client portals, including incorporating rewards, similar to loyalty cards. For example, these rewards could be earned for achieving savings targets or reading strategy reviews, which also serves to improve a client’s own financial literacy.

Gamifying client portals can serve a number of purposes, including:

  • Keeping clients more engaged in the advice process;
  • Driving client behaviour;
  • Rewarding clients for reaching agreed milestones or performing specified tasks;
  • Retaining existing clients and attracting new clients;
  • Improving the client value proposition; and
  • Showing client appreciation.

“And while there is a lot of compliance around this sort of thing, if the industry can do more to actively influence good client behaviour, then advice businesses get better, and the nation’s financial literacy rates improve, which has to be a good thing,” says Andrew.

“This is something that WealthO2 is looking closely at. We’re getting strong feedback from reward providers and we don’t see any reason why this couldn’t work in the financial advice sector. This is something advisers should be looking out for in about 12 months time.”

About

Andrew Whelan is CEO of WealthO2. He presented a session on ‘AdviceTech meets InvestTech’ at InvestTech 2021.

The session was moderated by the Joint Managing Director at Finura Group, Peter Worn.


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