Past, present, and future of financial planning technology

With Andrew Walsh, Managing Director and CEO of Iress

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About the podcast

Andrew Walsh shares his journey from founding Xplan 20 years ago to becoming the CEO of Iress. Andrew talks technology adoption, where advisers should start, the curse of the digital magpie and the importance of leveraging and protecting data. Hear Andrew’s thoughts on the future ‘bionic’ adviser, and how advisers can harness robo-technology to provide an on-demand client experience.


Matt Heine: Hi. I'm Matt Heine, joint managing director of Netwealth, and welcome to Between Meetings. In this podcast series, I chat to industry professionals and thought leaders on what made their careers successful and the opportunities and challenges that they see on a wide range of topics as they relate to the delivery advice in financial services. I hope you enjoy their unique insights. Andrew, thanks for joining the show.

Andrew Walsh: Great to be here, Matt. Great to speak.

MH: Andrew, as I was doing a bit of research for today's podcast, it was really a walk down memory lane and I'd actually forgotten a lot of the important milestones of your career. So, if it's okay, I thought it'd be great just to hear from you how you've ended up running Iress and what the last 20 years have looked like.

AW: Certainly. It certainly feels odd when you describe it like that, Matt. I've thought a lot about this as this whole year of Fintech is about and around us because when we first started building financial planning software, it was just after Y2K and the tech boom had been and gone. And at that point, access to capital was quite a different thing than what happens in the world of Fintech today.

But we were, most advisors at that time were using desktop software and it may have been part of a local area network. And we were promoting web delivered software and had to build it to work in a local network environment, but saw the inefficiencies of lots of duplication across advisor office, particularly when you think about that at a dealer level or even several practises that are working together.

And so that's the future we saw, and we wanted to automate the things that we saw occurring in duplicate or in multiple times, and have set that course. And so that business called Xplan technology was acquired by Iress in 2003. And we easily set about growing wealth management within Iress and chasing competitors down and offering features that just weren't available elsewhere. We ended up buying the business that we worked for previously, which was Visiplan from IWL in 2007. And soon after that, we acquired a piece called Plannertech which is where risk researcher came from.

So there've been several acquisitions since then that have augmented the underlying organic growth that we had, and now have a business that operates in Australia and globally delivering financial planning software to thousands of advisors. And so it has been a pretty tremendous journey where back in 2003, we had a hundred people at Iress that were employees and now well over two and a half thousand. So it's been quite a journey when you think about it in those terms.

MH: Absolutely. And had you always been in financial markets or how did you end up building financial planning software?

AW: Yeah, so I worked as an actuarial consultant with Mercer back in the nineties and worked in a small team that was called risk finance and insurance. And we did out of the square actuarial work for a whole range of different clients. The Visiplan business was a client at the tie, and so I ended working for that business and felt that we had had a different view of where things should go in the future and took the very bold or naive step into starting our own software business.

MH: It's an interesting time. So we started in 1999, so pretty much around the same time as you did at Xplan. And as you mentioned back then, I remember sticking stickers on CDs and sending it out to advisors so that they could upgrade their Crystal reports and there's a lot of other stories. In fact, many offices didn't actually have modems or even computers in offices when we went out to see them.

AW: I remember that one of the big questions of advisors was how many of your clients have email addresses? And there was a lot of debate back then about email addresses only being for the young. And what we find today within the advisor client basis is that there's no discrimination as to who uses technology and even more so this side of 2020.

MH: Absolutely. We might actually come back to that, multi-channel communication at some stage because it's a fascinating area and it's only going to continue to grow. But if you go back even 15 years ago, you were one of the first businesses that pioneered this idea of financial planning software and modelling with CRM. What was it that led you to that insight? Or why was it that you decided to go down that path when everyone else was doing something different?

AW: Oh yeah, well, that's right back then it used to be called financial planning software. And there was a heavy focus on the financial planning calculations and that was closely accompanied by this thing called a fact find which was the database that stored basic details about the client, and often it was an individual client, not the partner. It certainly wasn't a household.

But there was so much more around the client that added to how a business would service that client and that needed a system that would store the data, track it, grow it, enrich it, and allow the business to operate. I think that was the shift that financial planning software was for the tool an advisor used or a power planner used, but what we wanted to solve for was the way the business operated around that artefact.

And that's really where the strength of CRM came, and putting emphasis on the whole of client, or putting focus on the client and the household and making sure there was rich data around it to support the business.

MH: And so at the time, did you see yourself building out a CRM that happened to operate in financial markets? Or was it always the idea that it would be an end to end solution?

AW: So, interestingly Salesforce was around the same time that we both started and it was very clearly a horizontally focused CRM. We were quite focused in wanting to apply it to a vertical, which was financial services and giving that advice. So we've been quite disciplined in not wanting to get distracted from that because we believe that domain expertise is a strength where businesses can use it.

MH: And having talked about the past, if you think about the present and particularly having, well still navigating our way through a pandemic, there's a lot of commentary around the fact that technological adoption is really fast-forwarded five, maybe 10 years. Where do you see the industry currently sitting as it relates to the use of technology? Are they using 5% of what Xplan and Iress can do? Where do you see the big opportunities?

AW: I think that the tools and features will probably always exceed what a user picks up and that's true in Word or Excel or any other application. I think that for the most part, the response on technology over the course of 2020 has been a necessary response and tool to continue to operate. I think there is a difference between those businesses that are using technology, be it Zoom or other tools, or our software, as a thing that they need to do business, or whether it's used strategically.

And I think that's the kind of difference that we see in different business set-ups and business types. It's those that have developed a strategy for the business, have a plan to execute that, and know where technology is going to play a role on how to leverage and exaggerate that as opposed to those that are using it to get by.

MH: Absolutely. And with the amount of change that's happening in the industry, a lot of advisors are leaving their traditional homes and setting up new businesses. Where do you think they should be starting when they're thinking about the technology journey? Because there is so many options out there. What's the first thing that they need to be thinking about apart from putting in that plan?

AW: Yeah, so having an idea of how they want to operate and what they want to achieve is essential to provide guide rails as to what decisions to make and not make. We talk about the curse of the digital magpie, which is where people and businesses can chase shiny objects or shiny technology ideas all the time and not ground on what do they need to achieve that strategy and business plan. So I think that thinking through what the role of technology is and how it fits to deliver that is really critical.

Where data plays a role and having a strategic eye on the data that's collected, how it's protected and how it's leveraged is really critical. And for the businesses that are in new homes and have the ability to control that end to end, I think that those two are worth getting right at the beginning.

I think the other step is not to try and boil the ocean because you could spend all your time trying to get to a desired state or perfection, and it has to be iterated because what you think today, and the decisions you make today will certainly evolve in six months or 12 months time. And so I think it is never a set and forget, and it needs to be something that rates as the business changes.

MH: And you mentioned data before, which is very much top of many practises listening at the moment. Data as a concept, I think is not particularly well understood as far as what is data, what data needs to be collected, and more importantly, how do you leverage that data? Where are the big opportunities that you see with the data that the industry collects and how can people really start that data journey?

AW: Data quality is one of the first things to think about, and that goes to is it correct? But also is it complete? Is all of the data that means something about a client stored? Is it protected and today's data privacy and obligations that sit around other people's data is far different than what it was 20 years ago and needs to be central when thinking about storing data.

Until that's in place, you can't think about what the opportunities from data might be. And I think data risks being today's buzzword, and like other things have been buzzwords in recent years. But unless it's broken down into the components of intent, protection and leverage, it is too hard to grasp.

But we see lots of businesses that have had data quality challenges and data completeness challenges, but data is still held as this silver bullet that's going to automate, or artificial intelligence is going to fix all of these data challenges, but it's actually quite boring when you think about what has to happen in building up a quality base of data.

The types of things that I think come from it, do go to how do you automate. Even the most basic things of how do you deliver an online experience to your client? That's actually not possible without data. And so that needs to be of quality and there to be confidence in that data in order to have clients engage with it. And until that happens, then people are dreaming if they think that artificial intelligence, methods and machine learning will do wonders in the business.


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MH: Absolutely. And just going back to data protection, because it is incredibly important. And it's only when you see your client's details floating down the middle of Collins Street, that someone's going to take it particularly seriously. Data protection is ultimately everyone's responsibility, but do you think there's more that licensees can and should be doing, and what should practises be doing to help protect their data?

AW: Yeah, so I won't dig into aspects of information security and that cyber protection side, but just in terms of where data is stored, I think that that is an active responsibility of anyone that is responsible for third party data, or clients data in this case.

And so what am I using and where is the data stored, and who has access to it, and how is it protected, and how do I return that data? How do I delete that data? How do I ensure that it's kept safely? Are some of the basic questions that every business should know and what we saw over the course of the Royal Commission where there was lots of impost on licensees to deliver data to regulators for review was that was often hard to get and was with a whole collection of different suppliers and applications. And that data sovereignty for a business is pretty real.

In other parts of the world, customers or individuals have the right to be forgotten, and that puts an obligation on businesses to remove it all, and that is easier said than done. But as you say, I think it needs to be front of mind for the SME as well as the licensee.

MH: What we're seeing in our research currently is that there still seems to be quite a divide between practises and licensees that have dedicated resources for data protection, security, and roadmap versus those that don't have it all and perhaps are running a committee. What are some of the things that you're seeing in the industry that are working well, given the confines?

AW: Depending on the size of the business, will depend on whether it is a full-time role, but certainly it needs to be part of the risk register. And I think incident management is the other important area to ensure that there is a clear follow-up. In Australia, there are obligations on privacy and data loss, and so I think it needs to be certainly more prominent in everyone's consideration.

MH: And if we start to think about the future, what is it that excites you about, I guess your role personally, over the next couple of years, but also as a business?

AW: There is so much technology change in the way that technology is being used to influence the world. We've just come out of a rollercoaster couple of weeks with GameStop. So it's pretty intriguing the role that, not tech so much, but what tech can facilitate with the communities that build around it.

We are pretty excited about what we are doing with what we see as the first application of blockchain technology in advice with a solution that will bring together and make efficient the fee consent obligations that really move from investor through advisor licensee and through to where monies are deducted.

So that has the potential to be devastating for business efficiency, for all those involved. And we think that blockchain will be a great mechanism to deliver a solution to a whole bunch of parties that don't trust each other. And we think that the impact there for the industry is significant.

So I'm very keen to see that. I think that the misuse of blockchain in lots of places where databases could solve that problem are rife, and I think this is a really good multi-party solution that will make a difference in advice in Australia.

The thing that is really exciting is how does an advice business operate with efficiency and really look into the future for... Amidst all the challenges, but to a future world that is scalable and profitable.

And there are so many people that have unmet advice needs, which for the most part might be quite simple, but don't have the privilege of relying on professional financial advice. And I think that it's only with efficient delivery and interactions with customers through technology, that that scale will be something that is seen. And I believe the technology will allow SMEs or small, medium enterprises, small businesses to be able to deliver to that, like any institutional size or grade service delivery.

Through a bionic advice process, or just additional automatic in the back office?

MH: Well, I think both, and I think that what robotech has shown is... One of its highlights is how inefficient some of the advice processes are and how disconnected they are and how they could be more efficient if things were solved in that light. So by putting things together, by integrating them, thinking about what end to end looks like, not only does the advisory experience improve in thinking profitability, but the consumer experience is actually much more real time, when they want to use it, where they want to use it. And it's certainly not confined to nine to five in an advisor's office, which has been typically what the expectation has been for professional advice.

You've got offices overseas in the UK, Canada, and possibly elsewhere. Robot advice has had a slow start and has really had exponential growth probably in the last 12 to 18 months. And yet is still very much in its infancies at best in Australia. What do you think's driving that lack of adoption or what needs to happen for it to really ramp up?

AW: Well, I think the advisor business, like if we ignore a startup and just think about what an advisor business is and delivering that bionic advice. Unless that electronic experience is integrated into the practise, then there are different ways the advice is produced and it's very disconnected and the client experience is disconnected.

And so we see that there is a spectrum of advice across different channels that might be online, might be on the phone, might be in person. And the nature of advice will sometimes determine which channel is best.

But unless the client experience can sequence across those channels seamlessly and that the results and the experience is consistent, then that will lead to a poor client experience. And that goes to how quickly the responses are, what the consistency of experience is. So I think that systems and automation in the back office, how an advisor operates today, is one of the main things that hold that back.

I think the other thing that holds that back is proposition clarity, and what is the product that advisors deliver to customers? And how is that delivered? What does it cost to deliver? How is it priced? I don't see a lot of, and it's with that clarity, that I think that businesses can then be clear and confident as to what they offer digitally and online, perhaps at a cheaper price versus what is the high value product that requires an advisor's own time.

MH: And do you think that the adoption of tech by consumers now across all age cohorts makes designing that proposition easier in that it's not something an omni-channel advice offering just for millennials or the tech savvy, but it can be now pushed into, I guess, your pre-retiree and retiree markets?

AW: I don't believe that it is the exclusive domain of millennials at all. And if I take my own experience that I had time to think about some of these things at 9:00 p.m. at night. And I want transactions that are interactions and transactions that are really efficient at 9:00 p.m at night. I don't want to be doing that nine to five.

 And so, I think that's true of many and I don't think that an online presence, online interaction with clients is optional at all. I didn't believe it was optional pre-COVID, but certainly post-COVID, it's not optional.

People of all ages are interacting on video conference and using technology to do things that they wouldn't have considered technology for, and so the idea of going back to an analogue existence for finances doesn't match. So I think it's mandatory and businesses that aren't thinking about how they interact with existing clients and prospects online, and I'm not talking about just a website. I'm not talking about just the portal that's read only. I'm talking about actual interactions, I think will be tested.

MH:  And on that point, given also the communication channels are broadening almost on a daily basis with the addition of Signal and WhatsApp, Facebook Messenger, Zoom, Teams, Slack. How does that all start to come together into something that's not only compliant, but useful for financial planning?

AW: It's hard to think about how the way to engage with clients in a scaled way fits a business because every individual has got their own preferences as to whether they like WhatsApp, they don't like WhatsApp. You could apply the same questions on any media.

But I think it needs to be thought about in terms of what is not real time communication and what is real-time communication. And I don't think that business hours are limited anymore. And it goes to what is the differentiated experience that client is going to get? And I think that clients will want real time response. We are going to have to find a way to simulate real time response without that requiring humans.

And so I expect that in time, much of that will become automated. The kind of vision in the future of delivering advice. We think about advice and services delivered to clients as being things that happen offline and are delivered to clients that are generated by people.

Do we think in time that a computer could give answers to a client, and if computers give answers to clients based on the data that an advisor has, is that advice? Is that not advice? Is that compliant? I think there are a few things for us all to be tested on and how that fits into the regulatory framework you operate in and the compliance view of that.

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MH: Absolutely, and that ability to triage at the right time becomes critical.

AW: Well, I think that's the secret of hybrid advice, and the robot advice has notoriously high dropout rates, but those dropout rates can be filtered based on knowing who the client is potentially, but what they're looking for, and that might need a proactive call from someone, instead of allowing them to have a failed experience online.

MH: Andrew, we've now been chatting for about half an hour. We haven't even really scratched the surface, but one thing that's become increasingly apparent is that change is here for good. It's only accelerating. There's regulatory change, technology change, consumer changes. How do you instil a cultural or a growth mindset within your teams, and make sure that they're equally as excited about what you are now and into the future?

AW: We talk about agility and the importance of change in our organisation, because we can't guarantee next year, just because of where we are today, and we've got to be prepared to respond. We've got to be prepared to respond to new technologies that emerge and regulatory change that is cast upon us, and we see that as a core skill of our people. And so we talk about that a lot. We've seen lots of change and we try to impost change on our business to ensure that we remain flexible.

The other aspect of that is that innovation we see as a core part of everyone's job. We don't believe that innovation happens in a lab, that everyone has a role to think about how they improve what they do, how they do it, and how that manifests for clients.

Each year, we run a hackathon, which operates globally across 24 hours. Starts in Australia and ends up in Canada through the UK, and that allows teams to form around ideas that are cross-functional and they deliver those ideas to real products. And that is judged each year, and that is a really important day on our calendar to create an impetus and remind people that we're here to respond to what's happening around us, but also to innovate and create new.

MH: Some of Google's best products or inventions have come out of their 20% time or hackathons. What are some of the ideas that you've seen over the years that have been productized and really made a difference?

AW: There are a whole bunch of them. We've had some fun ones like controlling trading applications with 3D virtual reality lenses, and throwing commands at software applications. And they fold down into very simple ones, like building integrations to Google calendars, or even things that affect the way that we operate.

One year, the way that we onboard people at Iress was not as good as it could be, and someone who was a new starter was really inspired to think about how do we improve that? And now that is highly regarded as an experience when you join Iress. Through to a whole range of things, such as how files are stored in the back of the system, which is quite low level. Through to engagement tools around financial planning. And so there is unbounded enthusiasm around ideas that come from these hackathons that is really inspiring.

MH: That's fantastic. And before we head off, just one last question for you. I know you're a very keen cyclist. How important is staying fit to being able to turn up to work and be your best every day?

AW: I never used to think about that, but now see it as an essential thing, and it started for me as being a physical thing, and I see it an essential mental thing now. It's really one of the only places that you cannot afford for your life to be sitting and looking at a device. And so it forces me, firstly, out in the fresh air. It forces me to be social with a group of people I ride with, and it certainly doesn't have a photo or computer anywhere near me.

So that freedom from the workplace, or at least to collect thoughts while riding, is pretty vital for me and so it's a regular thing. I commute to the CBD by bike and see that as a really important separation of all the things that are going on at work from home.

MH: Absolutely, and hopefully one of the silver linings from the pandemic is more and more people are looking at different ways of commuting into work, and I think cycling, walking, running have got to be pretty close to the top of the list.

AW: Yeah, they sure are.

MH: Andrew, we've unfortunately run out of time, but thank you so much for sharing your insights. It's always good talking tech. Congratulations on what you've built and continue to build.

AW: Great. Great to talk about it. Thank you.

MH: Thanks for listening to this episode of Between Meetings. For more episodes and to subscribe to our series, visit the Netwealth website, iTunes, Spotify, or your favourite listening service. And if you want to contact me or engage or discuss any of the topics raised, please find me on LinkedIn or Twitter, or send me a private message. We hope you can tune in to the next episode.


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Views expressed are of the interviewee and may not be the opinion of Netwealth or its related companies.

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