The Financial Advice Business of the Future – Workflow

Over the past couple of years there has been much said about the inexorable impact of technology on the future of financial advice. Almost all of it focussed on disruption to the ‘product’ of financial advice and its delivery; ‘robo’ v ‘human’. Opinion from some quarters, typically those with heavily vested interests, portrays the inevitable demise of the human advice interaction. This makes for bold headlines but fails under even the most modest level of scrutiny.

Whilst interesting in a tabloid sort of way, the ‘great robo debate’ clouds the more meaningful discussion of what the financial advice business of the future looks like.

I’m happy to go on record saying that the role of a Financial Planner will be here for a long time to come. In fact, with the right adjustments to structure, tools and skill sets, the financial advice value proposition will be strengthened, not diminished in coming years. I read with interest recently that US ‘robo’ pioneers, Betterment, have evolved their offering to include direct contact with human advisers.

Over the next couple of weeks I’ll be publishing a series of articles, each looking at a different aspect of financial advice businesses, and how I expect them to evolve. I work closely with firms at different points on this journey and all are grappling with whats next, so you’re in good company if some of this feels foreign.

To be clear, this isn’t intended to be a step-by-step guide, after all every business is unique and every business owner has unique goals. Also, I’m not Nostradamus, this is my view of the world – others may argue that I’ve got it totally wrong and that’s ok, at least we’re having the right discussion.

Financial advice firms, like all other businesses, are comprised of people, the processes they follow and the technology they use to deliver the product. In this instance that product is advice.

Specialist product systems have a tendency to evolve at a slower rate than those addressing business management needs

Another useful way to view businesses is to consider the systems needed to ply their trade (the product systems) separately from those needed to manage customers and operations (business management systems). Specialist product systems have a tendency to evolve at a slower rate than those addressing business management needs due to their narrower market focus and more specialised function.

Given that many words have already been spent on advice product systems, I’m going to start in the business management space. In particular, I’ll explore what makes up this space functionally (people & process) and what is happening on tools (technology). This a broad area so in this first blog I’m going to concentrate on one key aspect of the financial advice business of the future – workflow.

A global survey of advice businesses in 2016 pointed to workflow automation as the number one issue financial planning businesses want solved. Even ahead of profitability. Drill in on just the Australian results, and workflow automation remains the number one issue.

The question that no-one seems to be asking is; how is this seemingly simple functional need the most burning issue facing an entire industry globally?

David Haintz, Principal of consulting firm Global Adviser Alpha and former Head of Advice at Shadforth says, ‘The issue with workflow in advice businesses is simple. Everyone relies on their advice tool for everything from CRM to SoA. The systems are simply not up to the task.’

He goes on to explain ‘If businesses want to grow, they need to separate the technology needs of running the business from those of producing client advice’.

I have to agree.

‘If businesses want to grow, they need to separate the technology needs of running the business from those of producing client advice’.

While most of the advice product systems prevalent in Australia have workflow to some degree, none cater for business management processes well at all. Quite rightly, they focus on what they were designed for, producing compliant advice documents.

Before I delve too far, it’s important to validate the need for workflow. What value does it bring? What is the pay-off for the effort invested?

Lets start by defining workflow. According to workflow is:

‘A progression of steps (tasks, events, interactions) that comprise a work process, involve two or more persons, and create or add value to the organisation’s activities.’

Now we’re on the same page about what we mean let’s look at the major benefit areas..

Doing things the same way each time has obvious benefits. Staff are clear on what happens next at every point, so wasteful down time while work is continuously re-explained is avoided. There are less considered benefits related to hiring new staff or introducing a new outsource partner. Standardised workflows make increasing capacity simple, ensuring maximum value is delivered from day one.

Key to good process design is determining the most efficient path through the required steps. This optimisation unlocks latent capacity within the business, reducing the need to increase headcount and lowers operational risk levels.

A huge part of any well run business is the ability of the management team to understand how each part of the business is functioning at any time. For this to be effective each business activity needs to be measurable and comparable over time. Clear, repeatable processes provide the backbone to robust management analytics.

Often seen as the most burdensome component of running a financial advice practice, compliance is also fundamental to establishing trust. It’s not going anywhere anytime soon so, rather than fight it, advice businesses need to strive to reduce the operational impact associated. In many ways, this is a culmination of all the other benefits of well documented and automated workflow.

Sometimes, despite everyone’s best efforts, something goes wrong. For the majority of businesses today retracing what happened to identify the point of failure has a devastating affect on the whole business. With automated workflow this exercise becomes simple. Well designed systems help pinpoint issues through audit features. In fact many eliminate the most common causes of issue by alerting management in real-time when deviations occur.

So returning to the original question; Is there sufficient return on investment to justify automated workflow sitting as the number one issue that financial advice businesses globally want addressed? Absolutely.

The next article in this series will address the role of CRM. Is it the be-all and end-all major global software providers like Microsoft and Salesforce want you to think it is?