financial advice, Financial Planning, Technology

Advisers adopt more tech as numbers shift

advisers technology

Advisers are adopting more technology as the number of their peers decline and their client bases continue to increase in size.

The decline in the number of financial advisers and a rise in the number of clients per adviser has increased the pace at which advice practitioners are adopting technology, according to new research released by Investment Trends.

The “2023 Adviser Technology Needs Report”, compiled by the research house, found that as the number of advisers fell to 15,700 at May 2023, the average number of active clients per adviser rose from 113 to 120 in the past year, following a similar increase from 107 to 113 from 2021 to 2022.

Investment Trends head of research Dr Irene Guiamatsia said this figure was approaching Dunbar’s cognitive limit where people can only sustain stable relationships with around 150 people, adding: “This renders considerations of scale, digital engagement and the broader role of technology more pertinent than ever.”

As such, the report highlighted that to manage these relationships advisers were using more technology to address the specific needs of clients, leading to an increase in demand for retirement planning and cash-flow modelling tools, as well as greater interconnectivity between tools.

“There is no subsiding in the interest advisers express for seamless data transfers between the various systems they use,” Guiamatsia said.

“While the focus remains on traffic between planning software and investment platforms, there is also substantial demand for integrations with bank accounts, trading tools and appointment scheduling software – all of which can support advisers in meeting this growing client demand.”

At the same time, the use of investment platforms has been reduced, with 43 per cent of advisers stating they now only use two platforms, a figure which increased from 32 per cent in 2022, with just over 10 per cent open to considering other platforms.

“Despite the consolidation that has occurred, 12 per cent of advisers remain open-minded about alternative platform solutions. Platform providers therefore have every interest in seeking to better understand what advisers are looking for and offer an appropriate solution that’s going to best help them help their clients,” Guiamatsia said.

The report, now in its twentieth year and based on an online survey of 632 financial advisers between April and May 2023, featured for the first time questions relating to advisers’ use of artificial intelligence (AI) and their readiness to deal with cybersecurity issues.

According to Investment Trends, more than half of advisers were welcoming of tools such as ChatGPT, with 11 per cent expecting a ‘very positive’ impact and another 44 per cent expecting a ‘positive’ impact.

“Advisers with a positive outlook of the role of AI see quick wins in the areas of research/modelling, data analytics, reporting, but also cybersecurity. These are all areas mentioned to a much greater degree than digital advice is,” Guiamatsia said.

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