The logic for wider use of technology by financial advice firms to reduce cost, improve service and increase profitability feels obvious. That said, until recently there has been a shortage of direct evidence of these outcomes being achieved in the UK.
In the US, Fidelity has run multiple rounds of its eAdviser research, which has repeatedly demonstrated that advisers who make more use of technology have more clients, higher assets under advice, higher income and happier advisers. Until now there has been no comparable UK study.
But things are changing. New analysis published by Intelliflo at its recent conferences has presented for the first time detailed and compelling evidence of the impact making use of technology can have on an advice firm. The research is based on logging over 1.5 billion clicks in their Intelligent Office system, using Splunk, a data analytics tool, over the last year and includes results for 1,140 firms representing 17 per cent of the entire UK adviser market.
It is important to recognise that this work measured how the system was used – no individual client data was accessed during the process. Only firms that have been using the Intelliflo software for a full year were included.
Intelliflo measured the extent to which adviser firms used five key pillars of its system. These were the firm’s data quality, as well as the extent of their use of four key parts of Intelligent Office – automated income reconciliation, electronic valuations, the document designer capability and the client portal. The company built methodologies to measure customer success in the use of each of these elements and generated a score for each.
As part of the process Intellifo has labelled the firms measured as sitting in one of four categories – explorers, adopters, embracers and champions. The champions have on average three times as many actively serviced clients as the explorers. The champions also have over double the average level of assets under advice, yet it is the explorers, that is, those firms using least technology, that charge the most per client.
This research delivers important messages both for Intelliflo users and the wider industry. One of the most hotly debated subjects I hear advisers discussing is the ease of use, or lack of it, of the adviser software they use. Because of its market share – nearly one in three advisers now use Intelliflo – its name comes up in this context regularly. That said, I hear similar views for and against virtually every similar software system in the market. They all have their fans and their critics. Regardless of personal views the hard numbers in this study show that if an advice firm makes full use of Intelliflo it can have a dramatic impact on key areas of their business.
Intelliflo are now notifying each of the firms included in the analysis which category they are in. Any firm notified they are in one of the lower cohorts – explorers or adopters – should be asking themselves what they can do to make more use of the software?
Interestingly, the adviser firm with the highest score in the study has only been an Intelliflo user for 16 months. This demonstrates that benefits can come quickly provided advisers make the right investment in time and training. Evidence that adviser firms who make most use of technology actually charge less to their clients is also an important message for consumers and personal finance media. It must be attractive to be able to identify advisers who can be demonstrated to charge less whilst also providing better service.
This study provides a valuable business case for more investment in technology across the industry given the positive outcomes it proves can be achieved.