July 24, 2024
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Investment Trends has uncovered the annual average technology spend of financial advice firms and how advisers are adopting artificial intelligence (AI).

The research firm’s Adviser Technology Needs Report surveyed over 1,730 advisers to gauge their current and expected usage of technology.

It discovered that $37,000 is the annual average tech spend of advice practices, which they plan to increase by 6 per cent to $39,000. Meanwhile, larger practices – especially those with five or more advisers – are more inclined to grow their tech budgets and are looking to do so by 8 per cent to $91,000 per annum.

Ludovic Sevestre, associate research director at Investment Trends, recognised the strong demand for better technology integration as advisers consolidate their tech stacks.

“Advisers recognise the need for seamless integration across their technology platforms to enhance client experience and operational efficiency,” he explained.

“This integration is crucial for delivering accurate financial advice, allowing advisers to focus on client relationships and planning. For providers, the opportunity lies in developing systems that adapt to future advancements, driving growth and client satisfaction.”

According to Adviser Ratings, approximately 74 per cent of practices leverage a tech stack, up from 71 per cent in 2022. This includes tools focused on customer relationship management (CRM), advice production, revenue management and workflow automation.

Investment Trends also examined how advisers are integrating AI into their everyday processes. Some 37 per cent of advisers already use AI tools to enhance practice efficiency, the firm found. A further 43 per cent of advisers display interest in adopting AI in the future, contingent on support for implementation and privacy concerns.

Breaking down the current uses of AI, over 40 per cent use these tech solutions for editing purposes and 33 per cent utilise it for customer service.

The most sought-out areas for those not already using AI is customer service and reporting at 34 per cent each, followed by research and modelling at 33 per cent, and data analytics at 30 per cent. Another 29 per cent are looking to adopt AI to assist with practice management, which continues to be at the forefront of advisers’ minds.

Sevestre continued: “AI is transforming the financial advisory landscape by automating routine tasks and providing deeper insights through data analytics. Advisers who embrace AI will be well-positioned to offer more efficient and personalised services to their clients, gaining a competitive edge.

“Providers that develop AI tools to enhance client interactions and strategic decision-making will lead the way in this evolving landscape.”

The research corroborates with findings from Adviser Ratings earlier this year, which revealed that 47 per cent of advice practices are adopting AI for client engagement, such as newsletter production.

Moreover, Investment Trends pinpointed cyber security as a critical concern for advice firms at the moment. Over one in five advisers rate the issue among the top three most vital factors when choosing an investment platform.

“Providers who focus on robust security measures will safeguard client information and reinforce their reputation for reliability and trustworthiness, essential for long-term success in the financial advisory sector.”

Earlier this week, Money Management explored how investment platforms have a “once in a generation” opportunity at the moment, with the rise of self-licensed businesses prompting advisers to select their platform of choice typically every six to seven years.



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