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Praemium | The Power of Connecting

  • By Jason Stockwell

Connecting with clients through Managed Accounts technology can increase client engagement and build stronger business says Praemium


Technological innovation is driving change across businesses globally, specifically in how a business deals with its customers. Customers are demanding more; more information, better service and more engaged relationships with organisations. So what does this mean for the financial advice sector, where customer relationships really are the core of an advice proposition?

The cornerstone of the financial planning relationship

The changing regulatory landscape around financial advice has increased the compliance and administration burden on advisers, leaving less time to devote to understanding clients and tailoring advice to suit their needs. To add to a financial planner’s time and resource limitations, the fallout from the Global Financial Crisis has made it more difficult to develop the trust required in the clientadviser relationship. Clients are demanding more transparency and control over the investment process, and fewer clients will hand over the investment reins and content themselves with one review a year. Building enduring trust is becoming harder.

So, how does an adviser build trust? Put simply, make a client feel that their needs are the priority, and keep them informed.

Communicate with clients the way they want to be communicated with. It’s easy to say, harder to do. Good technology is the most powerful tool available; however, technology is advancing quicker than business models are adapting.

Technology advances and business model adaption at a disconnect

It is incredible how much information is now at everyone’s fingertips. By the end of 2016, global internet traffic was 1.1 zettabytes per year (to put that into perspective, one zettabyte is the equivalent of 36,000 years of high-definition video.) In 2018, 90% of the UK population are internet subscribers, and 47.74% of internet usage is via mobile vs a declining 52.26% through desktop.

With technology connectivity advancing at such a pace, as an industry we need to ask:

  1. Have our business models adapted at the same, or a reasonable pace, to keep up with this innovation and change of consumer behaviour?
  2. Is the industry having a positive enough impact on the wider population to materially increase the number of people seeking financial advice?

Unfortunately, time and resource restrictions have been an easy excuse for many within the adviser community and provide a reason to continue as they always have done. Many are maintaining their current models with a focus on retention rather than any real substantial growth.

The outlook for growth

The cold reality for the industry is there does not seem to have been any real net growth in clients. The Financial Advice Market Review in 2017 suggests that as little as 6% of the population had sought regulated financial advice in the last 12 months. All that has happened is that existing, unhappy clients have switched advisers or an adviser is acting as a disaster recovery agent helping a self-directed client to dig themselves out of a financial or strategic mess.

Though there has been no real industry growth, stable retention rates only help to support apathy amongst practices. There is little motivation to provide clients with enhanced connectivity, control and transparency if they convince themselves that it’s not needed, they’re getting by okay. Social media, for example, isn’t deemed relevant for their business due to the belief that an ageing client is not technologically connected. This overlooks a significant social change that is occurring that may force an adjustment in their thinking. Soon advisers may have to confront the reality that those advisers who have developed connected client bases will get the most positive feedback and referrals, and those who need to chase their administrator to work out their finances or gain ad hoc portfolio information are falling behind.

Unfortunately, the generic client engagement model has not advanced much in over a decade. There have been small incremental changes as advisers add components of technology at different stages of the advice value chain; however, they have all been predominantly to the benefit of the practice. Many platforms continue to focus their attention on servicing the adviser to the detriment of building really engaging business models and investor portals. As other industries drive a more dynamic customer experience, financial planning still lags behind at the point when advisers and clients connect.

Some key observations:

  • From an investor perspective, the client engagement experience has remained consistent even though consumers are changing the way they request and consume other professional and retail services.
  • Client bases are more at risk than ever before and advisers need to be careful not to react only when clients start their exit process.
  • Increasing numbers of investors early in their financial journey are using online education and services to address their investment or financial strategy needs, remaining self-directed for longer.
  • General referral rates remain low as client are uninspired by their own experience, even though they may stay due to trust in their adviser.
  • As the financial planning industry continues to fall hehind other industries’ use of technology, its value proposition will continue to be eroded and new client acquisition will be hindered.

Of course, the more established and mature a practice is, the harder it can be to transition into this 4digital age. The options available can seem overwhelming and paralyse an adviser firm from making progress, but failure to change may pose the biggest risk to the business.

How the right technology can help transform your business.

Managed Account platforms on their own are just an investment solution with benefits to both the adviser and investor. To truly transform a business, however, using the Managed Accounts investment structure in conjunction with investor-focused Managed Account technology can dramatically improve client connectivity. Of course, many advisers see managed accounts simply as of benefit to the business of reduced compliance requirements and enhanced margins. But the real power of Managed Account technology is how it can allow advisers to engage and connect with their clients to create exceptional wealth management experiences. When focusing on a review or implementation of platforms an adviser firm should consider Managed Account technology for its benefits to the business, of course, and also for the important benefits Managed Accounts offer in capturing and keeping clients. Selecting the right technology to drive connectivity and keeping the client experience as the cornerstone of the advice process will yield a greater level of business benefits, such as:

  • A more scalable business, serving more clients better for the same effort
  • Added efficiencies to improve profit margins
  • Better transparency and control
  • Increased client satisfaction
  • Secure client retention and increased referral rates
  • Higher practice value

To understand the opportunities that Managed Account technology provides, an adviser firm should review their business needs alongside the client engagement experience. Managed Accounts technology providers like Praemium can offer clientcentric technology that is proven to be transformational for businesses internally and can assist in enhancing an adviser firm’s client engagement and connectivity.


About Praemium

The world’s leading financial advisers, investment managers, institutions, accountants and product providers use Praemium to manage or administer over $100 billion (£59 billion) worth of investment globally across more than 475,000 accounts. Established in Australia in 2001, Praemium has grown to be a market-leading provider of managed account platforms, investment management, portfolio administration and CRM solutions with offices in Australia, the UK, Jersey, Dubai, Armenia, Shenzhen and Hong Kong.

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