It is essential to clarify the difference between invention and innovation. Invention is a new idea, and innovation is the application and successful commercialisation.
This paper investigates the invention of new ideas that are now proven and applied innovations within the financial advice industry. It showcases how tech can improve the profitability and delivery of financial advice and create a more valuable client experience.
Fundamentally, tech innovation means introducing new technology into a business which:
Differentiates the business from its competitors;
Increases the perceived value to the consumer;
Improves or replaces business processes to increase efficiency and productivity; and
Supports the delivery of new and improved services, often to meet rapidly changing consumer demands or needs.
Innovative technology available today offers the ability to provide tailored, personalised and timely advice to clients in a far more efficient and cost-effective manner than previously thought possible.
The Financial Advice Industry has been required to adapt to a myriad of imposed regulatory and legislative changes through the Royal Commission, FoFA, Fee for Service guidelines, client best interest duty and minimum education requirements. In addition, it has been necessary to pivot to online advice delivery during COVID.
The challenges financial advice businesses face over the last few years have heavily impacted providing scalable, personalised, low-cost advice.
These challenges have been costly and evident on all levels:
Cost to serve. Outdated delivery model. Human error. Compliance. Limited scale. Competitive market. Changing legislative requirements.
Manual. Double data entry. Multiple tools. Time pressured. Not able to articulate or showcase the actual value of advice. Lacking real-time data and insight to make informed decisions. Changing education requirements.
It is disengaged with the process. Uninspired. Expensive. Lack of trust and transparency. Poor financial literacy. Flexibility on how and when they interact.
“Innovation in tech has seen the shift from challenges to opportunities, paving the way for a better approach to providing financial advice.”
Introducing tech innovation can support a financial advice business to:
Improve Advice – benefiting through machine learning, real-time modelling and data and providing advisers with better tools & analytics for producing advice, strategies and product comparisons.
Scale Advice – streamlining & digitising the advice process to enable advisers to reach and secure broader client demographics (eg: mass market).
Improve productivity & efficiency – the ability to provide advice to clients as a live, frictionless and digital experience, whilst at the same time increasing transparency & engagement.
Reduce Cost to Serve – increasing profitability through the automation of manual processes, saving time in administration & compliance to become more cost-effective, whilst reducing the need to add employees.
Simplify Compliance – Providing a single source of truth for data, reducing human biases & error, with central record management, inbuilt automated compliance management and simplified auditing.
Build the value of their brand – creating a better client experience and advice process to improve employee and client satisfaction.
Businesses that fail to innovate run the risk of:
losing market share to competitors with a better client experience
losing relevance in meeting client’s need
reduced productivity & efficiency
inability to scale services or offering