Using data and technology to future-proof your advice practice 

At our recent Wealth Matters webinar, we explored one of the most relevant questions for financial advisers: How do we use technology and data to build stronger client value propositions and grow more scalable, resilient businesses? 

Hymne Landman, CEO of Momentum Wealth and Martiens Barnard, Head of Technical Marketing at Momentum Investments

Hymne Landman, CEO of Momentum Wealth, chats with Martiens Barnard, Head of Technical Marketing at Momentum Investments, about how behavioural insights, data science, and retirement technology tools can help advisers offer more personalised and effective advice. 

Martiens Barnard: Hymne, many advisers today are struggling with three things: time, scalability, and consistent client growth. How can technology help? 

Hymne Landman: Those three are completely intertwined. Time is finite, but technology and automation can enable advisers to spend more time on what matters – clients and investment returns. Scalability depends on efficient systems and streamlined processes. When you combine those two, an advice practice can spend more time on enhancing the client value proposition which will of course support client growth.  

Hymne: Let’s talk about the role of data. I’ve heard the expression “data is the new oil,” but what does that really mean for financial advisers? 

Martiens: People think that saying data is the new oil means it is valuable, but that is not exactly the intent of the saying. The point is that data, like oil, it needs to be refined into something useful, namely insights, to become valuable. At Momentum Investments, we’ve seen the real power of data in analysing investor behaviour, especially switching behaviour. In our most recent Sci-Fi Report, we found that investors destroyed around R65 million in value through switching decisions in 2024, just in flexible investments and living annuities. We call this value that is destroyed a behaviour tax. 

Hymne: Behaviour tax? 

Martiens: Yes. That’s the value investors lose by reacting emotionally to markets and switching at the wrong time. For example, our data¹ shows that clients with a Retirement Income Option (living annuity) who switched funds paid a 4.26% behaviour tax. The irony is that many of the investment funds they switched from performed by up to 14% better the following year. Sometimes, the best thing to do is nothing. But that’s tough when fear or greed takes over. 

Hymne: That leads to this question: Can we predict who is more likely to switch? 

Martiens: Using supervised machine learning, we built a predictive model that shows key predictors of switching. Two stand out: the client’s age and the size of the investment, both common among living annuity clients. Then, we went further, we studied all switches on the platform to identify if investors show certain types of behaviour when switching. Here, we used a clustering algorithm to identify four behavioural archetypes based on switching patterns. 

Hymne: Fascinating! What are these investor archetypes? 

Martiens: We call them the ‘Avoider’, the ‘Anxious Investor’, the ‘Assertive Investor’, and the ‘Market Timer’. 

• The Avoider switches between conservative funds and incurs the least behaviour tax. 

• The Anxious Investor reacts to market drops and misses the recovery. 

• The Assertive Investor chases past performance, often driven by greed. 

• The Market Timer tries to beat the market but combines the worst traits of the anxious and assertive archetypes. They paid the highest behaviour tax, almost 6% in the last year. 

Understanding these profiles can help advisers tailor communication and coaching to the client’s personality and risk behaviour. 

Hymne: So, data is giving advisers a window into client psychology? 

Martiens: That’s where the opportunity lies to personalise communication, anticipate emotional reactions, and support better decision-making. For example, personalised reports based on behavioural traits can guide clients to stay invested during volatility. This can make a real difference in long-term outcomes. 

Hymne: Speaking of outcomes, how does this tie into retirement planning and the use of fintech tools like the Momentum Wealth Income Illustrator? 

Martiens: Retirement income planning is often where advisers feel the most pressure. We’ve built the Momentum Wealth Income Illustrator to empower advisers with market-realistic projections for clients based on long-term market views and client-specific asset allocations. 

Let’s say we have a 65-year-old client drawing 7% per year from their living annuity. For that income to increase by 5% every year until age 90, they’d need to earn 11.2% net per year. But if returns fall short by just 1%, income starts to run out by age 84; at 2% shortfall by age 81. It’s sobering. 

The Income Illustrator models these risks and suggests portfolio allocations – including Momentum Wealth’s Guaranteed Annuity Portfolio to support income stability and legacy goals. 

Hymne: And it’s all personalised? 

Martiens: It even incorporates the client’s legacy preferences and calculates an optimal blend between living annuity and life annuity components. And the best part? Thanks to the technology, what used to take 14 hours of simulation now takes seconds and we provide this for free to advisers. 

Martiens: Final thoughts for advisers reading this? 

Hymne: Data and technology will in our view not replace the financial adviser; but enhance the value that advisers bring to the financial planning process and clients. Momentum Wealth, a trusted investment platform for financial advisers to implement their clients’ investment strategies, continuously invests in technology to help advisers optimise client investment outcomes. Leverage technology to create more time, deepen client engagement, and future-proof your business. 

For more about how together we can help people build and protect their financial dreams on their investing journey to success, visit our website here. 

Source: Momentum Investments Sci-Fi Report, December 2024 

Momentum Investments is part of Momentum Metropolitan Life Limited, an authorised financial services (FSP6406) and registered credit (NCRCP173) provider.