Younger financial advisers driving tech change, finds NextWealth
Financial advisers aged under 45 are driving tech adoption for the profession, according to research by NextWealth for its latest Tech Stack Report update.
This younger cohort work in firms that: spend more on tech; are more likely to have added a new piece of tech in the past year; are less satisfied with their current tech set-up; and are more likely to be planning to introduce new tech in the next 12 months.
Firms that are prepared to spend more on tech appear to be attracting younger advisers. Advisers aged under 45 work in firms that invest more on tech, spending an average of GBP23,077 in the most recent financial year, nearly GBP10k more than average for all advice firms.
Over a third (36 per cent) of the under 45s plan to add a new piece of technology, more than double the average of 15 per cent. This compares to no advisers over age 65.
In the year to end March 2021, less than a third (28 per cent) of respondents aged under 45 said they hadn't added any new technology, compared to over half (56 per cent) of those aged over 65.
Heather Hopkins, MD of NextWealth, says: "Our research highlights that the future of financial advice is firmly routed to use of technology, with younger advisers driving adoption. Firms will need to invest in their tech infrastructure and be prepared to innovate if they want to attract younger advisers to their payroll. Providers will also need to up their game as the new wave of young, tech-savvy advisers comes through.
"It's safe to say that Covid led to a high degree of ‘distress purchasing' - advisers had to move fast to enable remote working for employees and to engage with clients. Zoom and Microsoft Teams provided a lifeline to keeping business going. However, our research indicates that their popularity post-pandemic is less certain. By contrast, eSignatures were described as easier and better, suggesting advisers will prefer them post-pandemic."
Unsurprisingly, during the Covid restrictions three quarters (75 per cent) of advisers saw an increase in clients using their client-facing technology. Over a third (36 per cent) have seen a significant increase.
Only 4 per cent of financial advisers do not offer client-facing technology.
Hopkins says: "We found client-adoption of tech is consistent across age bands, though slightly higher among clients of younger advisers. Whether this is because younger advisers are more confident using this type of tech is speculation but could be one explanation."