Financial advisers are particularly agile and innovative professionals, often developing new ways to address the challenges that face them in their day-to-day work, writes YTML’s Kevin Liao.
Working in the fintech industry I am often asked two questions:
- How open are advisers to partnering with technology?
- How innovative are advisers?
The first question relates to advisers’ attitudes to technology – some are open, some are less so.
The second question is far more interesting, however, because the premise of the question is that advisers are not very innovative.
The thinking goes that advisers are essentially small business operators who use technology in an ad hoc manner.
This couldn’t be further from the truth – advisers are true innovators.
Sure, they are small business operators, but their pioneering spirit to solve problems, challenge old ways and look for new solutions is incredible.
Technological innovation in the advice industry has certainly evolved over the past 40 years.
Back in the 1980s and 1990s, innovation was mostly paper-based using Excel and Word, and from the 2000s up until now, innovation has been based on fixed modeling algorithms using major software providers to bring it to life.
These major software providers focus on delivering projects for the larger institutions.
This has seen the birth of many specialised, focused tools providers who service the larger end of town and who have the scale to dominate the marketplace.
More recently, discussion of robo-advice has dominated talk of innovation in the technology space with its promise to deliver a new era in advice and relevance to more people.
Unfortunately, the more agile boutique practices and AFSLs with more unique offerings are not getting the same attention. The high barriers for advisers with great ideas to enter the fintech market, makes it hard for them to get their innovations off the ground.
Thus, their technology experience is somewhat different. The technology ventures of these businesses often end in the early phase of their development, with advisers frustrated and disappointed.
This is understandable, as many of the founders are SMEs rather than technology experts. They don’t necessarily know what they are getting themselves into and may have not done the appropriate market analysis for needs and wants.
Further projects are often not planned well and focused on the problem they are trying to solve. Building technology/software can end up becoming too expensive and over budget.
This is irrespective of whether it is in house or outsourced, Australia or overseas.
Since the early days of YTML, when we were mostly a website development provider for advisers, we have experienced an influx of requests to convert simple client engagement calculators into a web application and make it available on their websites to help them convert people browsing the website.
Requests were often simple and included budget calculators, needs analysis, risk profilers and the customisation of forms.
More advanced requests included online fact finds, quoting tools/fee calculators and simple strategy modeling.
Some more extreme requests include aged care calculators, estate planning tools and comprehensive strategy modelling. Most of the requests are either filling the gaps of the existing software providers or are driven by the itch to provide advice with different ways/interpretation of algorithm/process/interface.
These players have perhaps experienced the more dictated approach of current major providers and want to move in a different direction.
In all of the above requests, Excel is the most commonly used software, and there’s a reason for this – it is the one of the most powerful, easy to use and popular software to date.
For advisers though, it is the accessibility and usability of Excel that is a big attraction, along with the fact that it puts them in control and allows them to be more proactive in a fast-changing environment where changing client expectations and interests as well as legislation and regulation are the norm, that appeals to them. More traditional software development will likely find it hard to catch-up.
Most advisers know how to open an Excel file and build some simple mathematical calculations; some advisers can use it to build forms.
Some can even use it to build calculators or modelling, or to build a database.
Few, however, can create software.
To work with developers, many advisers put the document requirements in Word, typing formula onto the page and leaving it open to human or translation error by the developer.
The more precise ones will build a prototype on Excel to demonstrate the algorithms and hope the developer can reverse engineer.
Some advisers may build an Excel tool for internal use only, but it could be better to commercialise it and get a double return.
That is to say, your business can use it and gain efficiencies and other businesses can benefit from your tool and in return you get the passive income for your IP.
Kevin Liao is CEO of YTML.