Michael Kitces, Washington DC-based financial planner, commentator and legendary Nerd’s Eye View blogger, was one of Heather Hopkins’s star guests at our recent Advice Tech Live event.

Are you wasting over 50% of your time on “stuff”?

They began their conversation by agreeing what advice tech is fundamentally for. Heather said that with NextWealth research showing that advisers spend a quarter of their time actually with clients, the most important thing is to get that number moving upwards, and Michael agreed, quoting very similar US research which also shows that on average advisers only spend 20% of their time in client meetings, 15% of their time with prospects, 11% of their time on managing clients’ portfolios, but over 50% on what he calls “stuff”… most of which are the administrative, servicing, and meeting and plan preparation tasks that need shrinking (through technology!).

“Go deeper, not faster”?

But next came a surprise. How should advisers spend the extra client time that technology can create for them? Serving more clients, right? According to Michael, wrong. His research shows tech is helping advisers go “deeper, not faster”. For example, he describes a more natural, conversational onboarding process, where rather than spend time simply gathering the new client’s data, advisers can talk over the client’s plans, hopes, fears and aspirations, taking the time to build real and personal relationships, not just spreadsheets. The end result is not a faster data gathering process, but a richer one.

Business Process Re-engineering (remember that?)

In fact, says Michael, it’s not just clients who benefit from this kind of deeper insight. Research shows that working more efficiently simply in order to serve more clients is often counter-productive for advisers too. There seems to be a key threshold, at around 250 clients, beyond which increasing client numbers results in more stress and less career satisfaction for the advisor themselves. Move in the opposite direction, says Michael: look after fewer clients but do more for them and charge them more for that additional value.

Having said all that, Michael also warns against focusing exclusively on the role for advice tech at the front-end onboarding stage. Technology has vital new roles to play at every stage, and what’s really required is an approach which sees the opportunity in terms of a phrase we often used a few years ago, full-scale Business Process Re-Engineering. That’s a big challenge, and the question inevitably arises: where’s the investment needed to develop all this new technology going to come from?

Not, according to Michael, from the obvious sources. In the US, he says, private equity and venture capital firms are preoccupied with the 300-million-strong end-consumer market. Developing tools and tech for 300,000 financial planners feels a bit small-time. The gap’s being filled in two ways:

  1. A growing number of product providers, who, in Michael’s words, “are saying look, if we can develop vertically-integrated high-quality technology, we can attract advisers to us and if they’re using our tech they’re probably going to use our products as well.”
  2. Advice firms themselves building a vast range of “home-grown” kit, created to fill gaps that they see in their own processes and then sold to other firms until – much to the originating firm’s surprise – before too long it becomes an advice tech provider first and an advice firm second. (Michael cited many examples of this, including the firm he’s set up himself.)

Still a long way to go?

You don’t have to look back over many years to appreciate the extent of change that technology has already created – after all, just 25 years ago we didn’t even have the Internet. Michael makes it very clear, though, that our journey into advice tech still has a long, long way to go.

We’ll be hosting free Advice Tech Live webinars throughout 2021, free for members of the NextWealth Research Panel. Providers who subscribe to our Adviser Tech Stack reports can also come free. Our next event is on platform document submission and eSignatures. We all hate forms and wet signatures in particular! Find out how your preferred platform compares when it comes to document submission in this free 30 minute webinar Platform Document Processing Webinar (free for members of our research panel!)

You can subscribe to Michael’s excellent newsletter here and watch the full video recording here.