The dark side of technology in financial planning

By: Francois du Toit, CFP® PROpulsion

In today’s fast-paced financial world, technology has become an indispensable tool for financial planners, advisers and wealth managers. However, as with any powerful tool, technology comes with its own set of challenges and potential pitfalls. As an experienced professional in the financial planning profession, I’ve seen first-hand how misuse or neglect of technology can impact our practices and client relationships. Let’s explore some of the common mistakes we make and how to avoid them.

The ostrich approach

One of the most significant risks in our profession is simply not using technology at all. It’s tempting to stick with what we know, especially when we’ve been successful in the past. However, the financial landscape is changing rapidly, and client expectations are evolving just as quickly.
By avoiding technology, we risk falling behind our competitors and failing to meet our clients’ needs. Imagine trying to create detailed cashflows without the aid of sophisticated software or attempting to comply with ever-changing regulations using paper-based systems. It’s not just inefficient; it’s practically impossible in today’s environment.

To overcome this, start small. Identify one area of your practice that could benefit from technological enhancement, such as client communication or information management. Research available solutions and implement them gradually. Remember, it’s not about overhauling your entire business overnight, but about taking steps towards a more efficient and effective practice.

The square peg in a round hole

Perhaps even more dangerous than not using technology is using the wrong technology. I’ve seen practices invest heavily in complex systems that were ill-suited to their needs, resulting in wasted resources and frustrated staff.

Before implementing any new technology, it’s crucial to clearly define the problem you’re trying to solve. Are you looking to streamline your client onboarding process? Improve your risk assessment

capabilities? Enhance your reporting? Once you’ve identified your specific needs, you can research solutions that address those challenges.

Don’t be swayed by flashy features you’ll never use. Instead, focus on finding technology that integrates well with your existing systems and aligns with your practice’s goals and values.

The robot takeover

While technology can significantly enhance our efficiency and capabilities, it’s essential to remember that financial planning is, at its core, a human-centred profession. I’ve witnessed practices become so enamoured with their technological tools that they’ve lost sight of the personal touch that clients value. There are certain aspects of our work that simply can’t be automated. Empathy, nuanced understanding of a client’s goals and fears, and the ability to provide reassurance during market volatility are all uniquely human skills.

Use technology to enhance your client relationships, not replace them. For instance, use data analytics to gain deeper insights into your clients’ financial behaviours, but deliver those insights through personal conversations. Let technology handle the number-crunching, freeing you up to focus on building trust and providing personalised advice.

The shiny object syndrome

In our eagerness to stay current, it’s easy to fall into the trap of adopting new technologies simply because they’re trendy. I’ve seen practices invest in blockchain solutions or AI-powered chatbots without a clear understanding of how these tools would benefit their clients or improve their operations. Before jumping on the latest tech bandwagon, ask yourself: What problem will this solve? How will it improve our service to clients? Is it compatible with our existing systems and processes? If you can’t answer these questions clearly, it might be wise to hold off on that investment.

The half-hearted adoption

Implementing new technology is only half the battle. I’ve observed many practices falter because they didn’t invest sufficient time and resources in training their teams to use new tools effectively.
When adopting new technology, budget not just for the software or hardware, but also for comprehensive training programmes. Consider appointing ‘tech champions’ within your team who can provide ongoing support and encouragement to their colleagues.

Remember, the most sophisticated technology in the world is useless if your team doesn’t know how to leverage it effectively.

Practical steps for success

To harness the power of technology while avoiding its pitfalls:

• Regularly assess your technological needs and capabilities
• Develop a clear technology strategy aligned with your business goals
• Prioritise cybersecurity to protect your clients’ sensitive information
• Invest in ongoing training and support for your team
• Use technology to enhance, not replace, the human elements of your service
• Stay informed about technological trends, but be discerning in your adoption
• Seek feedback from both your team and your clients about technological implementations
• Remember, technology should be our servant, not our master, in the noble pursuit of helping our clients achieve their financial goals

Stay curious and raise the bar!

Francois du Toit created PROpulsion, a dynamic network for financial planners and advisers promoting growth and success. He presents the weekly PROpulsion LIVE show on YouTube, with over 270 episodes delivered, leveraging his 25 years of expertise while hosting guests both domestic and international to educate and motivate. Dedicated to learning and applying new tech, he aims to make a large-scale impact. For further details, go to www.propulsion.co.za.