Speaking at InvestTech 2019, Adam Pointon outlines some of the key considerations required to successfully roll out technology within a planning business.
When we talk about platform innovation, we’re talking about master trusts, wraps, and wrap bolt-ons. If we look at these offerings today, we have a bell curve in the middle representing SMA wraps and SMA bolt-ons. So, on one side of this bell curve are the legacy wraps and master trusts, which are almost gone, and on the other side of the bell curve is ‘Next Gen’ and ‘Bleeding Edge’.
In terms of innovation, ‘Bleeding Edge’ is not where you want to be. This is experimental R&D, where you’re coming up with commercial prototypes that may or may not work. However, ‘Next Gen’ sits between the SMA wrap/bolt-on and Bleeding Edge. This is the innovative edge, where you’re right at the cusp of leading the way with new technology and innovation.
But as an adviser, how do you get to this Next Gen space and stay there? The answer is innovation, which means different things to different people. I will focus on three areas of innovation: delivery, technology and culture.
Culture
Culture is incredibly important for any business. Culture embodies ‘trust’. Without trust you have fear and uncertainty. With trust you have the ability for staff to raise new ideas and for people to be themselves in order to think and act creatively. But in a fear culture, people are reluctant to come up with ideas and back themselves with those ideas.
Another element of culture is ‘purpose’. Purpose allows people to understand where they are going and why they are going there. When they are being creative in that trusting environment, they are actually aligned to the
‘why’ and ‘where’ that the organisation and team are aiming towards.
To create a dynamic culture, it’s important to surrounding yourself with people who care about the company and its vision. At Praemium, when we hire people, we actually look for individuals who have a caring disposition and who genuinely want to improve the product and the lives of others through their work. These are the type of people who are constantly thinking about ways of improving our products and services. They care about what we do.
Another part of culture is ‘continuous improvement’, which benefits everybody in every business. It involves looking back retrospectively at what has worked and not worked, and then refining that. Trust is a core element of continuous improvement, because without trust, people won’t talk about what went wrong. This means you don’t get the opportunity to improve or avoid mistakes going forward.
‘Data’ also plays an important role in the culture of a business. In a trustful culture, any preconceived ideas or bias can be removed by simply examining the data, without fear of internal hierarchy or ranking that may impede the unbiased examination of data.
Data warehousing is one strategy where you can take all your data from different silos and house it in the one place where you can query it. In fact, think about data like exhaust from a car. Data is being created all the time. So, unless you are capturing data at the time you are creating it, then it’s gone. And just like car exhaust, you can’t capture it once it has been produced and emitted.
This means you need to think about data, how you use it and how you may want to use that data in the future.
‘Dogfooding’ is the final element of culture. It’s a term that comes from Yahoo and essentially means to use your own newly developed product and service offering, as a way of testing it, before it’s made available to clients.
Delivery
So, how do you change things within a business, regardless of whether they’re big or small? The first thing to do is break these things down in order to change them. An analogy would be getting to ‘base camp’ first before climbing Mt Everest. You don’t try to change everything in one go.
Increasing the frequency of change by reducing the size of change, works well. It’s about doing small things more often. And when something is hard to do, the best way of making it easier is to break it down into more manageable pieces and doing it more often.
When making changes, you want people to progress and improve whatever is being changed, rather than undo it. You don’t want to make a change to the business or your technology, but then decide if the change doesn’t work out, you’ll simply undo it. That’s a mistake and you definitely don’t want that because it allows people to ‘half do’ things.
Instead, change should be about implementing in increments and following them through to completion, then deciding whether the changes are working or not, and continuously improving upon them.
Change applies to anything, not just technology. For example, moving to a managed accounts structure requires change. You need to try it first and then review it, and always try and move forward.
Delivery and change also requires ownership and care. This means having somebody follow the process from inception through to completion. If a person has come up with the idea, then let them be involved with the development and implementation process. Allow them to celebrate the success, which is great for staff morale and building a successful business culture.
Obviously, with change, there is always the chance of failure for any business. But it’s okay to fail, as long as you discover your failure early, pivot quickly and learn from that failure. Be confident to pivot. So, if something is not working, cut it off and change tack. Remember, failure is reinforcement learning in order to improve.
Technology
When it comes to technology, you need to have some type of foundation and architecture in place from which to work from. Architecture allows you to move more quickly. That’s why the likes of NAB and ANZ are moving to ‘microservices’, which is about making things smaller, so you can change them more easily without breaking everything.
Essentially, microservices is about loosely coupling services, so you can move faster and be more agile. It’s all about getting to ‘base camp’, so you can then decide which direction you want to go.
An important element of technology is vision. This is all about thinking of the future and actually doing something about that vision, today. There’s no point articulating your vision and then plan for it three years out and hope for the best. That doesn’t work.
Instead, vision is about what you can do today, to incrementally and iteratively move towards that. Again, it’s all about change. By doing a small change today, you can use that change and learn from it, as you move towards your future vision. But without having a vision and purpose, you’re not going anywhere.
With technology, if you simply keep refining something in the hope of making it better, you might actually miss something that is key to what you are actually refining. Instead, iterations, which includes experiments, prototyping and developing things that you are prepared to discard if they’re not right, enable people to come up with other ideas and changes that are better suited to where you want to get to. These changes can then be refined.
And data capturing and data use is important when you look at any platform or technology provider.
You need to ask yourself: Do they actually give me access to my data? Because you own that data. Do they allow me to export that data? Are they friendly if I want to move to another platform or will they make my life difficult? Will they allow me to walk away with my data and if so, what format will this be in? These are all questions an adviser should consider.
Technology driving client engagement
At Praemium, we have thought about data for a long time. We have planned for artificial intelligence and for machine learning. But we have always wanted to offer more for our customers and something that was useful for them.
So, we thought: Could we identify client behaviours that indicated when fresh advice and engagement was required by the adviser? Could we predict, based on our data, if an investor was going to close their account?
As a result, we launched an offering to advisers in early 2019, which provides client insights to advisers using our services. The insight notifies the adviser of unusual client behaviours, which are based on similar data from other investors who have previously closed their account. This is a red flag for the adviser to get in touch with their client. This new service offering is not about selling more products to clients, but to alert the adviser of their client’s life events or changed circumstances, which may suggest they are looking to close their account with them. It’s all about closer client engagement.
This is a good example of a company – in this case, Praemium – using its data to provide enhanced value to customers, by allowing them to have more meaningful conversations with their clients.
Technology partners and your strategy
There are a number of important things to consider when partnering with a technology partner and developing your own technology strategy. They include:
- Does the provider align strategically with where you are going?
- Who are their customers?
- Are they nimble and agile?
- Is the company innovative and what’s the evidence of this?
- Is the provider building on another technology that they are reliant on?
- Can the company provide the type of technology and agility you require to implement your strategy?
If your technology partner is building on someone else’s technology that they are reliant on, when they want to make a major change to something, they become hamstrung. They become as slow as their supply chain, and therefore, you become as slow as both of them.
Where do I start?
So, when it comes to developing and rolling out innovation within your business, where do you start? Indeed, how do you get to ‘base camp’?
Innovation is about solving problems in creative and more optimal ways. The culture of trust, transparency and ‘safe to fail’ is so important when it comes to innovation and change.
So, where do you start? Firstly, take a critical look at your business. If you are running a financial advice business, ask yourself: ‘What experience do I provide to my clients?’
‘Dogfood’ your business, by inviting your family and peers through your advice process and asking them for feedback on it. They will provide you with honest and valuable feedback. What worked, and what didn’t? What was good, what was bad? It’s all about the client experience.
And don’t think of innovation from the point of optimising your business. Instead, think of it from the client experience. Naturally, you can make your business more efficient by automating your SOAs, but does that really help the client? Do they really care and what does it mean to them?
And as for potential technology partners, ask a lot of questions. Don’t be afraid to query them, challenge them and doubt them. Importantly, make sure the technology aligns with your vision for the business.
Adam Pointon is Chief Technology Officer at Praemium.