It's time for future thinking

I’ve been reflecting on some of the key insights from last week’s great Owen James WealthTech event. In particularly a slide from the roundtable on the challenges of productivity.

The slide highlighted research from SEI & RedFox Insight which said the top two barriers to productivity within advice firms were, a lack of technology and inconsistent processes.

Now this is probably not news to anyone within our profession, and it’s an ongoing challenge for advice businesses large and small, but it did get me thinking about how we got here and why is it still such an issue.

I quickly concluded the issue is rooted in how advice businesses have evolved, how tech has been adopted and implemented historically, and how fintech is now rapidly advancing.

Paper to AI

Advice tech has often evolved to meet specific needs, from basic commission processing engines, through the era of back offices, to the need for ATR and KYC/AML tools. More recently we’ve seen tools for cashflow, financial planning and onboarding, and now increasingly sophisticated AI tools.

As solutions emerged and were adopted by firms it was often in isolation to solve a specific need or problem. Integrations were almost non-existent until recent years. This led to layering disparate technology tools on top of each other that required new or shifted processes to accommodate. This has inevitably led to firms across the profession -advisers, nationals, networks, providers, insurers - having convoluted, complex and siloed processes. Even worse multiple workarounds because the tech doesn’t work!

But let’s be honest the alternative is hard. Maintaining a strategic view on how your business is evolving and how technology, processes and people all align is difficult and time consuming. Especially when it’s not your day job. Add to that all the other pressures advice businesses face and we shouldn’t be too critical about the position we find ourselves in.

Future Thinking

So, what can be done?

We’re seeing new firms entering the fold who have the agility and opportunity to take advantage of latest and greatest technology in the market today. But for many established firms to do the same is much more difficult.

Whilst there’s more and more tech addressing more and more needs it’s important not to continue implementing single solutions for single siloed needs. The need for a holistic approach to technology implementation is more critical than ever. A holistic approach means not just adding new technology on top of the old but rethinking the entire tech stack with a focus on integration, scalability, and user experience.

Looking ahead, some firms face tough decisions about their future direction. A strategic reassessment may require a ‘back to basics’ approach, focusing on the core 'Why' of the business to move forward into the next evolution of advice. This involves defining a clear vision for the future, what you want to do and how you want to do it. Defining where your business will be in 2, 5 or 10 years. Envisioning what your client experience will be. Plotting the stages of the business lifecycle may you go through, and potentially thinking about succession planning.

This will then help identify the gaps between where you are today and where you need to be.

For some firms this may be a back to basics, fundamental rethink or a rip and replace exercise. If a business can do that there will undoubtably benefits from a fresh start.

But let’s be honestly it is incredibly difficult, almost impossible, for established firms to take this approach, it can be painful in terms of time, cost and effort. I’m sure we’d all like a fresh start in some aspects of our life, but as with life, transformational, wholesale change is sometimes not practical and often unsuccessful. Whilst the ‘Why’ remains the same it may require a different approach to ‘How’.

By starting with ‘Why’ we can understand the changes needed, be that tech, people, process, culture etc. We can then more easily understand the change cost (time, resource, expenditure, disruption) involved. But most importantly it allows for prioritisation of changes towards your future vision.

Prioritisation then allows for planning. Building the costs into your business plan to help understand how to deliver the changes over a defined period. ?Do you need to ‘invest to innovate’ or manage the costs within business plan.

Whichever approach to implementing change is right, I think we are at an inflection point where all businesses need to be giving serious thought to the future. With the changing demographics of those holding the wealth, declining numbers of advisers, a seemingly more aggressive regulator and the hyper evolving nature of technology many current business models and technology architectures could prove unsustainable.

It's easier together

While transformational change can be daunting, especially for established firms, prioritising incremental adjustments towards a larger goal often allows for more manageable, strategic planning. Only you know your business and its aspirations, but firms like Finovation can assist in developing strategies that align technology investments with those aspirations.

Now more than ever technology needs a holistic, strategic approach. Tech is no longer just a tool for a business; it is foundational to its success and should be considered not just as one piece of the puzzle, but as a part of the wider strategic framework.

If you do not think about the future, you cannot have one.