Home-grown software set to transform the financial advice industry

Forget robo-advisors; this nifty piece of software promises to improve results for both financial advisors and their clients.

It’s no secret that South Africans have a low savings rate and most citizens have inadequate (at best) retirement planning. One statistic says that over 90% of South Africans [i] will not have the financial resources to fund their retirement. There are myriad reasons for this looming catastrophe, but there can be little doubt that one major contributing factor is a suboptimal financial advice industry.

Financial planning is a hard sell. It’s an area replete with jargon so confusing that even accountants struggle to understand it. At the same time, it requires people to confront unpalatable financial realities, something most prefer to defer – rather like writing a will. According to a recent Brand Atlas Report, something like 70% of adult South Africans are not receiving any financial advice at all.

Even those who do consult an advisor do not remain engaged with their plans, and typically only revise them annually.

South African financial advisors also face existential threats, adds Alex Cook, CEO of Wealthbit, a boutique financial advisory company. New market entrants are leveraging technology to go straight to clients, and investment houses are also creating their own distribution channels.

Financial advisors face several constraints that prevent them performing optimally. Since the introduction of FAIS legislation, the compliance and administrative burden has increased significantly.
Cook estimates that the maximum number of clients that an advisor can effectively service is in the region of 150.

“In addition to their core clients, advisors tend to have a long ‘tail’ of at least another 150 clients who receive little attention owing to a lack of capacity – a lost opportunity for both advisor and the clients,” he says. “Technology can play a key role in making financial advice available to more people, but until now the market has lacked a truly robust and easy-to-use tool.”

Dearth of tools
Cook says that most of the tools on offer to financial advisors are too complex, making them difficult for both advisors and clients to use.

“Most tools do not help advisors explain complex financial options to their clients, with many of them resorting to Excel to provide a clearer picture – more work, more wasted time,” he says. “What’s needed is a way to reduce complexity, and make it easier for financial advisors to provide better service to a greater number of clients, while at the same time providing a user-friendly interface that allows their clients to understand their financial plan in depth.”

Arrie Pieterse, Head of Product at Wealthbit says that the current situation constitutes something of a crisis for the country – one that’s mirrored in other countries around the world. “Clients don’t want to be sold product, they want proper advice and they want a single view of all their investments,” he says.

“Advisors want as much of the administrative burden removed as possible so they can concentrate on the reason they got into the industry in the first place: helping clients become financially secure. We felt the only solution was to develop a new tool from scratch.”

The result, Wealthbit, is the result of collaboration between numerous certified financial planners (including two former Financial Planners of the Year), clients and the developers, with a tight feedback loop.

“An important principle was to take a human-centric approach so that it is easy to use for both advisors and clients. Prototypes were tested in user groups, with feedback integrated into the ongoing design process – a process that continues,” he says. “The development process took three years, and the system has been in active use for two years. A mobile app is currently in development.”

As the first user of the app, GCI is in a position to comment from experience. Cook says that 30 advisors are currently using the software to advise 3 212 clients, with over 8 000 records being updated monthly.

“Wealthbit has already proved itself in the field – its big advantage is that it has been designed from the ground up to meet the needs of both advisors and clients. It does all the complex processing in the back end but presents a simple interface at the front end,” Cook says. “The result is a better business for advisors but, even more important, more South Africans engaged with their financial plan and more likely to be able to retire in financial security.”