Tough questions ahead in financial planning industry's tech journey

Fintellect Task Force members lay out scale of wealth technology opportunity, challenges for advisors

Tough questions ahead in financial planning industry's tech journey

While technology can open new doors for the financial planning profession, industry and regulatory stakeholders will have to navigate numerous changes to unlock its full potential.

That was the overarching takeaway from a roundtable session at the recent Financial Planning Conference held by FP Canada, where members of the Fintellect Task Force shared insights on the potential of technological innovation to help make financial planning more relevant, inclusive, and accessible.

“I think the most valuable commodity is time. And technology gives us, the advisor, the ability to maximize our time,” Christopher Dewdney, who chairs the task force, told attendees. “If you do this correctly, you're able to leverage technology to take of mundane tasks, and allow [yourself] to spend more time in front of the [client].”

Quality vs. quantity

Neil Gross, the chair of the Ontario Securities Commission’s Investor Advisory Panel, was careful to distinguish between technology’s potential to enhance the quality of service to clients, and its ability to enhance the quantity of clients advisors can serve.

“You can use the technology to create better outcomes for the clients that you have. Or you can use the technology to create a better outcome for you by serving more clients,” he said. “We're really talking about improving outcomes for clients as the most important element of investor protection, and we need to make sure that we're leveraging technology for the right purpose.”

Dewdney noted that advice quality shouldn’t have to come at the expense of scale, especially if the industry is expected to provide advice from coast to coast. He pointed to the gap between the number of financial planners in Canada – there are about 17,000 CFPs and 2,000 QAFPs in the country as of September 30, according to FP Canada – and the population of roughly 40 million Canadians.

Jill Huls, CEO of Thrive Wealth Management, agreed that technology has accelerated advisors’ ability to work with clients.

“If you think of the last 20 years in financial planning, or investment advice, or insurance advice, … it's often been a one-to-one advice relationship. You had to access a human and disclose your information. You had to have a trusted conversation,” Huls said. “In the past five years, we’ve got the ability now to actually access some of those questions or information online through many of the mediums that that are available to us.”

The war for attention

But technology also enables investors to get information from other sources, notably from influencers on social media. The risk of investors being exposed to misleading information, the panellists agreed, is an important question for regulators and the industry to consider.

“You have TikTok. You have YouTube. You have Facebook,” Dewdney said. “You have a ton of financial influencers, accredited or not, putting out misinformation and also disinformation. And the end user is sucking it up.”

“How to protect the public from being misled by completely unqualified people who are under no supervision whatsoever in terms of what they post … that is a tremendous challenge for regulators everywhere, right now, not just in Canada but everywhere in the world,” Gross said.

One answer, according to Dewdney, is to fight fire with fire. Using technology, he suggested that accredited professionals could get a proper message out to combat misleading or incorrect financial information from unaccredited sources.

Huls agreed, adding that the industry should also consider the challenge of attracting people’s attention and trust online. “How do we get an institutional or accredited voice that we know can be trusted [to capture] more of that attention that is currently [going to other sources] whether we like it or not?”

Expect tech returns to come in time

To help maintain the pandemic-sparked momentum of technology adoption in the financial services industry, Gross said an organized body like the Fintellect Task Force has a potentially huge role to play as an agent of change. He said financial planners have to be conversant and involved in the creation of technological tools to aid in the future of financial planning and wealth management, though it might be hard for advisors at the individual level.

“For advisors as a whole in the mutual fund distribution channel, the average advisor age is 56,” he says. “[They] may be a little bit hesitant to make major investments in upgrading their skills. And that is a problem, because they're going to be highly dependent on the firms they're associated with, to provide them with ready-made platforms to help them be competitive.”

One concern raised during the session was that technology adoption will create added pressure for advisors, who are already faced with increased costs and the need to do a good job for clients. For advisors at larger institutions, Dewdney said, the cost of technology is usually subsidized by the firm as it’s able to leverage economies of scale.

“There’s no such thing as a free lunch, as with anything else. We’re in a world of evolution,” he said. “Ultimately, the results of [adopting] that technology should outweigh the underlying costs.”