Efficiency and the assurance of being compliant are major reasons more practices are turning to digital, according to the co-founder and president of Australian advice business management platform, Practifi.
On the latest episode of the ifa Show, Adrian Johnstone discussed the perceived “threat” of digital and argued that it can actually benefit the industry, particularly regarding its ability to “automate the compliance”.
“So don't automate the advice process, automate the compliance,” Mr Johnstone said.
He explained that embracing technology that accesses a practice’s data in real time can significantly cut the cost of compliance and in turn reduce the cost of advice.
“You don't have to look at technology in the advice issuing process, because I agree, it's a human skill.
“You've got to be able to look the person in the eye and understand their needs and see their behaviours, and do all those kinds of things,” Mr Johnstone said.
“Algorithms can only go so far, but if you can take costs out of the other parts of the equation, if you don't need someone to re-key stuff or to take it from system to paper to system, then you reduce the overall cost of running the business. Which means that, yes, your actual cost of issuing advice may still be just as high as it was, but the cost of operating the firm has improved,” he added.
A recent report by Investment Trends — which looked at the evolving technology needs for planners — revealed that the compliance burden continues to be the biggest challenge for advice businesses.
The study reported that as advisers continue to use new solutions, such as client relationship management systems (CRMs) and standalone modelling tools, they are demanding a better integration between the systems.