The ability to 'optimise' will be a major influence on financial advice software for the next 12 months with an uptick in interest expected, according to financial advice technology specialist Provisio Technologies.
In the current market, advisers are dealing with an aversion to scaled advice and a downwards pressure on fees, forcing them to look at optimising their financial scenarios.
"Over the last year we have seen a lot more advisers get in touch with us. What we're finding is the technology [and the market] is at a point where we're really going to see this start to spread like wildfire," Provisio Technologies director and co-founder Jye Tucker told InvestorDaily.
"There is a shift in the advice market, where more people are choosing optimisation tools over modelling tools."
He explained that forward-thinking advisers will likely be the first to decide how the more efficient style of advice fits into their business model, and consequently, what software and solutions would support it.
"Eight out of 10 Australians are looking for this style of advice over a fixed style of advice. It just makes sense," Mr Tucker said.
He said that the industry is familiar with modelling financial scenarios but tools with in-built optimisation are the next step in the evolution of advice software, and are having a huge impact on the way in which advisers work.
With most commonly used modelling tools, financial advisers input extensive client data before they can run strategies. Then, they need to model many different scenarios before eventually locating the implementation that's best for the client.
"Optimisation software has all the same smarts as modelling tools: handling contribution caps, Centrelink benefits, tax offsets, and so on. It has a full modelling engine at its core, and builds on that so that the adviser can work backwards from the end result they wish to provide to their client," Mr Tucker said.
The main benefit is speed. Optimisers automatically compare all possible implementations of a particular strategy, and find the best implementation in a fraction of the time it would take with modelling software.
"The key thing is that optimisation software eliminates time wastage associated with the adviser's trial and error analysis," he said.
Optimisation software covers common financial strategies such as transition to retirement, super contributions and retirement income planning, and can even incorporate things like Centrelink benefits and others.
