I’m not a big believer in panaceas. But one factor I’m confident will make a big impact on the future growth of our industry is reducing the cost of delivering advice.
Get it right, and it will be the key that unlocks so much more. More profitable businesses, more resilient operations and more accessible, attractive advice offerings that serve a greater volume and a greater range of people.
But to achieve all this, and to future-proof our industry, we’ll need to prioritise efficiency. And to unlock greater efficiency, the sector needs to focus on better integration. Here’s why.
This isn’t about ‘vertical’ integration but rather ‘horizontal’ – spanning and bridging different solutions and services
Helping advisers operate efficiently has been a focus for the sector for as long as advice has been delivered.
Over the past 20 years, platforms have helped make significant progress in this regard by improving advisers’ scalability, introducing online processes and creating ‘one-stop shops’ for many core advice processes.
But now there’s more that can – and must – be done to build on this foundation.
In an increasingly digitised sector, we must work together across the technology, workflows and touchpoints that form part of advisers’ businesses, including platforms, so they’re working seamlessly together to support each other’s purpose and strengths.
The main hurdle is looking past the understandable barrier of protecting own interests and working together towards these common goals
This isn’t about ‘vertical’ integration – making sure siloed products within a single provider’s product suite works together – but rather ‘horizontal’ integration: spanning and bridging different solutions and services.
At its most fundamental level, this will remove inefficiencies that add up to be a drain on time and profitability.
For example, greater integration and sharing of data across the technology advisers use to deliver advice, both initially and on an ongoing basis, reduces the need for constantly re-keying data and allows them to leverage technology to support the advice process, while focusing on building relationships.
That access to data could then be utilised to an even greater extent in future, as AI develops to identify ‘next best actions’, analysing patterns in data, risks, opportunities and supporting customised recommendations and alerts to save time and deliver better outcomes.
Achieving Consumer Duty requires cross-industry collaboration
I believe everyone in the sector shares the goal of efficiency through integration – and we’re certainly on the same page about good outcomes.
The main hurdle we’re going to have to overcome is looking past the simple, understandable barrier of protecting own interests and working together towards these common goals.
We’re going to be pushed to do this by the demands of the market.
There’s also the driver of regulation – most recently in the form of the Consumer Duty. As my colleague, head of savings policy Alastair Black, has eloquently stressed so many times, actually achieving the Duty requires cross-industry collaboration.
We didn’t need an excuse to start working closer together on a wider set of issues, but our ongoing compliance efforts here will give us an opportunity to start new conversations on collaboration, or deepen existing ones.
We will keep engaging closely with cross-sector bodies, such as Criterion and Origo, where industry-wide integration is top of the agenda
What could better integration look like in practice?
In many cases, it’s going to start with platforms providing a smoother flow of data to the ecosystem of technology advisers use today. Making these integrations, through APIs, are the technical building blocks.
The real opportunity is to go beyond the obvious and necessary, and think creatively to craft new services that improve the end-to-end adviser experience. This is something we’re prioritising as part of our roll-out of adviserOS. And, in the all-important spirit of partnership, we’re going to keep engaging closely with cross-sector bodies, such as Criterion and Origo, where industry-wide integration is top of the agenda.
This isn’t a voyage anyone can take alone.
As we look ahead to driving the advice sector’s growth, we’ll need this relentless focus on integration.
By working closer together, we’ll get closer to our goals – driving down that all-important cost to serve, helping facilitate more profitable, resilient adviser businesses, and helping clients achieve better outcomes.
Noel Butwell is chief executive officer at abrdn Adviser
Caught between two stools methinks…
The real way to become more efficient and cost effective, is to rely less and less on product and fund providers, and build independent products owned collectively by advisers…
Fund managers can be hired, actuaries too… the route to end product from closest to the client should be a winner… using third party regulated managers working for the adviser owners using cell based captive structures – both for protection and investments.
If anyone believes this to be fantasy… take a look at the Lloyds market… Brokers produce 80% of u/written product… if a good generic one, then they get a ‘market line slip’ – where all similar risks are written under that wording.
The current retail provider market relies upon very similar outcomes for premiums taken… the article wants a focus upon costs… well… cutting 40-50% of the current product provider salary and bonus pool would be a start!
P.S. Forget the CII who should be thinking about this!
I could not agree more with your analysis Noel. The problem with systems developments has been the
notion that advisers can be persuaded (often forced) to adopt poor quality systems solutions (in the absence of alternatives) that have largely been designed without input from them. Sticking British bodies on Australian IT skeletons has produced some rather monstrous beasts which are expensive to feed and of limited utility.
@Andrew Cartlidge – “largely been designed without input from them” – I couldn’t agree more. One of the worst offenders is abrdn’s Wrap. They spent years announcing the platform enhancements, which fixed exactly zero of the platform’s main frustrations and introduced a UI that is cluttered beyond belief. I can’t believe that anybody who works with the platform on a daily basis had any input into that mess.