By IMAP Team
Choosing and implementing the right technology for a financial planning business can be challenging and often confusing. Paul Moran (Moran Partners Financial Planning) shares his four-step approach to adopting technology.
Choosing and implementing the right technology for a financial planning business can be challenging and often confusing. Paul Moran (Moran Partners Financial Planning) shares his four-step approach to adopting technology.
<Body>The reasons an advice practice may not implement the right technology solution for its business can be many, ranging from cost and integration, to apathy and not fully understanding the capabilities of the technology.
But when it comes to selecting technology, Paul Moran CFP® - principal of Moran Partners Financial Planning - believes there are two biases in play that affect the way in which advisers choose their technology.
The first of these biases is the ‘endowment effect’, where advisers value what they already have more highly than what they don’t have. And the second bias is the ‘status quo effect’.
“In the status quo effect, if the perfect technology solution appeared for a business, the practice would still be reticent to change because that would require a change from them - the advisers,” says Paul. “Sometimes the endowment effect is forced on us from using software that is almost impossible to get out of, while the second bias is often a case of apathy and a general reluctance to change.”
Paul Moran CFP® - Moran Partners Financial Planning
It’s absolutely essential that we can trust the information that the software is providing us with. Not only is it important that the software looks good and actually does what it promises to do, but it also allows for seamless updates to keep the system and information up-to-date.
Technology adoption
Speaking at an IMAP Specialist Webinar Series on ‘Technology drivers for the new advice world’, Paul believes there are five categories of technology adopters: innovators, early adopters, early majority, late majority, and laggards.
“While we all like to think of ourselves as being in the first two categories, research has shown that there are very few real innovators, with a few more early adopters,” he says. “Mainly, most advisers fall into the early majority category, with some late majority adopters and a few laggards.”
When it comes to the adoption of technology, Paul believes there are three distinct phases: the look; the trial; and the adoption.
“When first considering and looking at technology, it requires a fairly low commitment by the adviser. It’s simply a matter of clicking a link to learn more about the actual software,” he says.
“However, the next phase - trialling - requires a bigger commitment of time. Typically, it takes about 5 to 10 hours to trial the software. Once you decide there is a real application for the software, decisions around the benefits and costs of the software are made, and if everything stacks up, the technology might be adopted.”
When considering technology, ask yourself: Does the software actually enhance compliance and can the client see the benefits, or understand the benefits, of what the technology provides to them?
Four-step approach
When it comes to implementing new technology at Moran Partners Financial Planning, the business takes a four-step approach to evaluating technology, which involves the careful consideration of how the technology measures up from an efficiency, effectiveness, quality and compliance perspective.
1. Efficiency
According to Paul, this first step in the evaluation process requires an advice business to ascertain - on a process by process basis - whether by using the software, there is a technological opportunity to improve the efficiency of the business. This might be through:
* An integration of processes that removes double or triple handling of data;
* The provision of a single source of truth. This single source of truth is where the majority of client data sits, and not spread out across three or four different systems; and
* An ability for clients to interact directly with the technology in a way that enhances and not detracts from the firm’s professional relationship with its clients.
2. Effectiveness
Effectiveness is about achieving a better outcome for both the client and the practice. Points to consider include:
* Is the business capturing information at a level that truly allows its advisers to ‘know my client’?;
* Is the data that advisers collect being securely stored and managed?;
* Does the technology enable advisers to identify areas of need that the client did not know they had?; and
* Can advisers use the technology in a way that offers the client a better outcome than they are already getting?
3. Quality
The third step that Moran Partners Financial Planning uses when adopting technology is to determine whether the technology actually provides the business with good quality information and outputs.
“It’s absolutely essential that we can trust the information that the software is providing us with,” says Paul. “Not only is it important that the software looks good and actually does what it promises to do, but it also allows for seamless updates to keep the system and information up-to-date.”
4. Compliance
The fourth step in the process is all about compliance. Privacy, security and the safe storage of information is critical, but understanding where your information is stored and how secure the data centres are, is also important.
“Most practitioners are starting to realise that holding client information onsite, on a local server, in their office, is probably the least secure approach. Similarly, emailing sensitive information, such as identification and advice documents, is highly risky.
“Software should be easy for a compliance team member to access, and easy for an adviser to demonstrate they have met or exceeded their obligations. Ideally, records should also be kept of who entered what information and when.”
Importantly, Paul says advice businesses need to ensure that compliance frameworks are embedded into the software they’re using.
“When considering technology, ask yourself: Does the software actually enhance compliance and can the client see the benefits, or understand the benefits, of what the technology provides to them?”
Different businesses at different stages of development will have different needs with their technology. If you begin the process with what you’re lacking from a technology perspective, you can then focus on what’s most important to enhance the four elements of: efficiency, effectiveness, quality and compliance
Tech-stack approach
According to Paul, developing a tech-stack begins with this four-step process. An advice firm also needs to consider the tech alternatives for each step and identify the costs of each technology. They also need to consider the integration needs involved, and involve all stakeholders in the trials, testing and training of the technology. Only once all these areas have been ticked off, should an advice business commence building its tech-stack.
“Different businesses at different stages of development will have different needs with their technology. If you begin the process with what you’re lacking from a technology perspective, you can then focus on what’s most important to enhance the four elements of: efficiency, effectiveness, quality and compliance,” says Paul.
“Whether you decide to go down the end-to-end software path or choose a best-of-breed solution, we don’t think one path is necessarily better than the other. That’s because different practices operate in different ways that work best for them.”
Like it or not, we’re surrounded by technology. Professions, like accounting, that have successfully adopted technology to help them with efficiency, effectiveness, quality and compliance, have done so by adapting their work practises to the software, and not expecting the software to adapt to their work practises. We need the technology to help us
Summary
When financial planning firms are evaluating and adopting any new technology, Paul offers the following advice: “When adopting technology, you need to be open-minded and flexible. Carefully consider the four-step process of efficiency, effectiveness, quality and compliance.
“Like it or not, we’re surrounded by technology. Professions, like accounting, that have successfully adopted technology to help them with efficiency, effectiveness, quality and compliance, have done so by adapting their work practises to the software, and not expecting the software to adapt to their work practises,” says Paul. “We need the technology to help us.”
About
Paul Moran CFP® is a principal of Moran Partners Financial Planning.
Paul spoke on ‘Advice technology’ as part of an IMAP Specialist Webinar Series on ‘Technology drivers for the new advice world’.