Financial advice firms expanding through M&A or consolidation strategies can utilise the benefits of technology to help scale their businesses and increase profitability.

The rapid growth in M&A and other consolidation activity is increasing the size and scale of the businesses at the mid-to-top end of the financial advice market. 

But firms typically inherit three significant operational hurdles along the way: advice delivered through largely manual operations; inconsistent advice processes across businesses; and clients on the books who do not fall within their target market (orphan assets). 

These create three sets of issues: inefficient and expensive ways of working, which hamper or prevent the firm’s ability to scale up and be more profitable; risks to the business through varying advice practices; and clients who are no longer profitable to serve using current processes. 

By implementing technology which offers a combination of consumer-led and human-assisted guidance and advice, all three of these issues can be resolved – thereby giving firms the ability to scale-up their businesses and increase profitability.

Scalability issue

The traditional model of financial advice, by its one-to-one nature, is not scalable. There are two ways to resolve this using technology. First is to reduce the amount of time spent on each case to enable advisers to serve more clients by taking out the time-consuming processes involved in the advice journey. 

For example, automating the manual and time-consuming elements of the client journey, such as fact find creation, onboarding, and suitability report writing, can significantly reduce the time taken to deliver end-to-end advice.

 This can both speed up the advice process for the client and the business and make it more cost effective, as it allows advisers to focus on where they add most value, which is building client relationships and bringing in new business.

Mass affluent 

The second way technology can deliver is by enabling the firm to serve more clients at reduced costs.

Using consumer-led technology, firms can target the mass affluent market in the UK, by deploying easy-to-use, automated guidance tools that assess and recommend ways to improve the client’s financial situation and wellbeing. They can then take the client partly or fully through the advice process, depending on their needs, with the option for human assistance where required.

By matching the consumer-led experience with the firm’s advice policy, every client receives centrally controlled, tailored advice which reduces compliance and risk issues.

Orphaned assets

In the same way, clients with orphaned assets who were thought of as unprofitable, can be taken through a consumer-led guidance tool to assess their current financial situation and projected retirement income. This can enable the client to make key decisions including whether to move their assets into a central retirement and investment vehicle. The process can also flag previously unknown assets that can increase the profitability of the client. 

Consumer-led, human-assisted technology is changing the way the financial advice market operates and is enabling ambitious, acquiring firms to scale their businesses by making their advisers more profitable while improving the client experience.