By Jayson Forrest
Martin Morris (Centric) explains the need for the advice industry to embrace technology in order to satisfy the digital expectations of clients. He also provides some insights into how to build a digital first culture within an advice business.
Digitisation has dramatically changed the way society operates. It’s changed how we communicate, how we shop, and how we consume information, making the world a generally more connected and inclusive place in which to live and work.
Digitisation has also increased the focus and expectation on access to timely information, and the lowering of transaction costs for goods and services.
Technology underpins much of what we do today, and continues to significantly impact financial services. However, as Martin Morris — Chief Client Officer at Centric — says: “Engaging technology is a marriage, it’s not dating. It’s costly and difficult to change and move away from. The implementation of technology requires careful consideration, and advisers need to be onboard with using it. Technology needs to be a cultural fit within a business.”
Addressing a session on ‘Building a digital first business’ at the IMAP Advice in Action 2024 conference in Melbourne and Sydney, Martin says the statistics around digitisation are worrying but compelling for the financial advice industry. These include:
- 90 per cent of the data in the world has been created in the last two years;
- In 2020, nearly 99 per cent of Australians accessed the internet;
- Only 3 per cent of Australians aged 16-64 don’t have a smart phone; and
- Only 20 per cent of Millennials prefer face-to-face communication.
“Expectation with digital technology is growing exponentially,” says Martin. “The advice industry needs to embrace technology, including artificial intelligence (AI), in order to meet client expectations and the growing digital delivery of advice.”
Martin Morris
Centric Wealth
Expectation with digital technology is growing exponentially. The advice industry needs to embrace technology, including artificial intelligence (AI), in order to meet client expectations and the growing digital delivery of advice
Embrace innovation
Martin believes it is challenging for advice businesses to embrace technology, simply because there are so many digital offerings available to advisers, making the advice tech market crowded, confusing and not well-integrated.
“Advisers also have AI to contend with,” says Martin. “AI is scaring advisers because they think they’re going to lose their jobs, and it’s scaring licensees because they don’t know what AI is or how to use it. However, there are huge opportunities in AI for advisers.”
Nevertheless, when it come to the advice industry embracing technology, research paints a dim picture. Data from the Finura Advice Tech Benchmarking 2024 report shows that 67 per cent of advisers are only ‘maybe’ considering using AI in their business. In contrast, just 8 per cent of advice businesses are fully prepared for AI and are actively pursuing innovation. Worrying still, only 31 per cent of advisers in Australia actively use their client portal to engage with clients.
In addition, research from the Australian Bureau of Statistics (Innovation in Australian Business) reveals that less than 50 per cent of financial services businesses in Australia are classified as innovation-active, and only 31 per cent of SMEs introduced a process improvement between 2021 and 2023.
“These statistics are concerning,” says Martin. “Sadly, Australian businesses don’t have a great innovation culture. We need to do more to understand emerging technology and innovation, identify how it can help advice practices and clients, and embrace it. We need to be building digital first businesses in order to keep up with the digital expectations of clients and rapidly evolving technology.”
We need to do more to understand emerging technology and innovation, identify how it can help advice practices and clients, and embrace it. We need to be building digital first businesses in order to keep up with the digital expectations of clients and rapidly evolving technology
Creating a digital first business
According to Martin, at the forefront of meeting the increasing digital expectations of clients is creating a digital first business that meets clients’ needs. Such a business comprises of three key components:
- It adds more value and exceeds client expectations — Digitisation has increased the focus and expectation on access to timely information, and the lowering of transaction costs for goods and services.
- It prioritises digital outcomes — The banking sector has set an example, by capitalising on the use of data and AI to not only improve efficiencies but also provide an enhanced client engagement model to its clients.
- It has a business wide culture — Being digital first is a mindset across the whole business, and is not about being an actual technology business.
Martin adds there are five core principles that underpin a digital first business, which advisers should work towards. They are:
1. Business vision — Create a clear, documented business vision, that articulates who your client is and the problems you’re solving for them.
2. Team development — Motivate your team by cultivating and encouraging knowledge growth, celebrate learning and success, and turn failures into learning.
3. Be curious about data — Understand your business’s data points and implications, and use it to deliver better outcomes. Research, review and refine using data, like client surveys.
4. Staff engagement — Build an open and non-hierarchal business model that facilitates and encourages new ideas and ways of delivering your client outcomes
5. Client first — The cornerstone of your business is your client. Start with the client and it will always benefit your business. However, start with your business and it may not benefit the client.
“The benefits of using technology to create a digital first business are many,” says Martin. “A digital first business will typically have enhanced staff engagement. Microsoft has found that companies with highly engaged employees outperform their competitors by 147 per cent.
There is also a benefit in increased efficiency and productivity. Research from Forbes has found that digital first companies are 64 per cent more likely to achieve their business goals than their peers.”
Another benefit is optimisation of resources. According to global management consultancy, McKinsey & Company, redefining individuals’ roles and responsibilities so they align with a transformation’s goals, leads to a 50 per cent increase in successful transformation.
McKinsey also noted that an additional benefit of creating a digital first business is enhanced client engagement, where it found 70 per cent of buying experiences are based on how the customer feels they are being treated.
According to Martin, the statistics behind making client loyalty an advice business’s number one goal are compelling with:
- 90 per cent of customers spending more with companies that personalise the customer service they offer them;
- 74 per cent of customers saying they will forgive a company for its mistake after receiving excellent service;
- 76 per cent of customers saying they would switch to a company’s competitor due to multiple bad customer service experiences; and
- 64 per cent of business leaders revealing that customer service has a positive impact on their company’s growth through referrals and improved brand reputation.
The benefits of using technology to create a digital first business are many. A digital first business will typically have enhanced staff engagement. Microsoft has found that companies with highly engaged employees outperform their competitors by 147 per cent
There’s profit in getting digital right
Drawing on analysis from the Business Health Future Ready IX (2022) report, advice practices that engaged in managed accounts for more than three years and had more than 75 per cent of their clients in managed accounts, had over 85 per cent more profit than those practices that didn’t.
“Managed accounts are an efficient way to run an investment portfolio. Businesses that use managed accounts typically embrace technology and also engage with platforms to provide better client engagement and reporting. They work towards better business and client outcomes,” says Martin. “Often, the businesses that have succeeded the most are those that are both digital and client first focused.”
Martin adds that when connecting your business goals (like digital) with your client’s expectations, the simple task of seeking client feedback and proactively acting on that feedback, can generate an increase of up to 90 per cent in an advice firm’s profitability. And getting the client value proposition correct and ensuring that it is fully documented and not just in the principal’s head, can see a 107 per cent lift in profit.
In addition, the Business Health research shows that when a business seeks staff feedback, and uses someone external to the business to gather that feedback, there is an increase in profit by 250 per cent.
Businesses that use managed accounts typically embrace technology and also engage with platforms to provide better client engagement and reporting. They work towards better business and client outcomes. Often, the businesses that have succeeded the most are those that are both digital and client first focused
A digital solution
According to Martin, today’s successful advice businesses are the ones using technology to fix problems and provide solutions. Typically they first work out what their client problems are; they then work out what needs to be solved to fix the problems; they then actively engage their team to talk about the problems and solutions; from there they work out what needs to be done to rectify the problems; and then they find the solution.
Regardless of the problem an advice business is facing, Martin believes there will always be a digital solution for it. However, he cautions that it’s essential for advice businesses to first identify any gaps in resources or skills they may have in the business. He believes these gaps can easily be plugged by the use of clever technology.
“The advice industry needs to embrace technology. We’re on this journey together. If you work on what problems you’re solving, then do it in small components — whether it be marketing or AI. Start by fixing those parts of your business you don’t like doing each day. And make sure you have the right team in place who will drive the digital innovation in your business. That means recruiting people with the right skills,” he says.
“Remember, clients don’t buy the technicalities of advice. Clients are buying you and your client engagement model.”
About
Martin Morris is Chief Client Officer at Centric Wealth.
He spoke on ‘Building a digital first business’ at the IMAP Advice in Action 2024 conference in Melbourne and Sydney.