Is innovation being scuppered by infrastructure?


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Is innovation being scuppered by infrastructure?

This summer, I held a virtual event for a hundred-odd financial advisers and wealth managers. I asked them all a simple question: ‘has lockdown made you more or less likely to reconsider the technology that you use?’

The result was stark. A staggering 92% of my straw poll said they’d be more likely to take stock of their tech stack in light of Covid-19 and the subsequent WFH struggle and strife that’s ensued.

I guess it’s not surprising. Over the last few months, many advisers will have had to grapple with new tools and technology to make remote working, well, work. And it’s made all the more difficult by the comparatively backward and inefficient nature of investment software.

Laptop and tablet showing working from home setup

In most areas of our life, we’ve come to expect fully-digital service propositions. But when it comes to managing money, the faff of ‘print, sign, scan and send’ is still rife. Research by investment consultancy NextWealth showed that more than 50% of investment platforms insist on a paper form and wet signature for at least one process.

Our forced hibernation has revealed in even greater clarity a fact we’ve all known for some time: the infrastructure of investments is inefficient, inflexible and unwieldy. It’s powered by decades-old software and patched together by manual processes.

Bad infrastructure is bad news – for everyone.

Research by Origo showed that the average financial planning firm uses around five different technology systems across the advice process, along with two separate investment or ‘wrap’ platforms.

Using lots of tools can make for inefficiency at the best of times. But to make matters worse, few of these systems integrate. As a result, long-suffering administrators have to input the same client information in multiple tools – adding extra work and more room for error.

In this context, it’s not hard to see why most financial advisers can’t justify the cost of helping the less affluent. And so 84% of advisers in 2019 said they’d turn away a prospective client with less than £100,000.

84% of advisers in 2019 said they’d turn away a prospective client with less than £100,000

Ambition isn’t enough.

But what of the role that disruptive, technology-led solutions can play?

Well, it’s certainly true that we’re seeing an upsurge in new and ambitious firms operating within the digital wealth space – firms looking to support a new generation of saver and investor, regardless of their affluence.

Companies like, Penfold and Eurikah, with their mobile-first approaches to financial planning, retirement and investing.

However, while there’s no shortage of ambition, it’s being held back by the very same infrastructure weaknesses that are sapping larger businesses of their innovative flair.

To build the functionality that would allow clients to buy and settle trades, or hold investments in tax wrappers, would be unthinkable for young firms looking to prove product-market fit.

And safeguarding client assets is probably something a new-to-market firm would want to outsource, too.

The trouble is, using a third-party to act as custodian, or provide investment technology, tends to be prohibitively expensive, too. There are hefty set-up fees, long-winded integration processes, and charging structures that may well be better suited to large firms with millions of clients.

Inventing exciting solutions to real customer problems is one thing, but bringing them to market affordably and quickly is another entirely. And unfortunately, it’s still far too costly and slow.

We’re rebuilding the infrastructure of investments and advice.

At Seccl, we’re dreaming of a future where the path to innovation is straightforward, seamless, and affordable.

In our future, firms won’t need big budgets to make their ideas a reality. Building an investment proposition will be as quick and simple as including Google Maps within an app.

Businesses will work together in an exciting ‘plug-and-play’ ecosystem, where innovation is shared, not siloed.

Firms of all shapes and sizes would be free to focus on what they do best – making life easier for their customers.

And the worlds of investing and financial advice would finally be accessible to all, no matter their wealth or privilege.

We think it’s a brighter financial future – for businesses and for customers alike. And it all starts with infrastructure.

For more news and views on the future of Digital Wealth, be sure to check out the Seccl-sponsored ‘State of the Market’ report from AltFi. You can read it here!

Pile of State of the Market, Digital Wealth, 2020 Annual Reports