Fourth Line the most popular RegTech Solution 2023

In the ever-evolving financial advice industry, technology is a powerful force reshaping businesses and client relationships.

Netwealth’s 2023 AdviceTech Buyers Guide 2023 explores the shifts and trends that are occurring among advice firms at an industry level, as well as within the ‘AdviceTech Stars’ which Netwealth classifies as the high-performing firms at the forefront of harnessing technology to improve their advice business.

The AdviceTech Guide is based on research from 250+ advice firms and provides valuable information on pivotal technologies and trends in Australia. It allows licensees, advice practices, and advisers to benchmark their technology usage and supplier adoption against high-performing ‘AdviceTech Stars’ while exploring 30+ available AdviceTech solutions, including their key features, benefits, and top suppliers.

Fourth Line has noticed a willingness and eagerness amongst licensees and advice firms, over the last 12 months, to explore technology solutions that will help them improve practice efficiencies, client engagement, and adherence to compliance and regulatory requirements.   The Netwealth Guide supports this trend and also notes the challenge licensees and firms face when selecting and implementing new technology, especially when it impacts their business operations, staff, and clients.

Some of the key findings of the AdviceTech Buyer’s Guide are:

• Spending as a percentage of revenue has plateaued, although not declining:  This means advice firms and licensees are cautiously exploring technology solutions that suit their needs.  In 2023, spending on AdviceTech remained consistent, hovering at an average of 7.7% of revenue. Advice firms are looking ahead with optimism. A significant 84% of firms and a remarkable 93% of AdviceTech Stars plan to invest more in advice technologies next year, of that, 28% of firms and 44% of Stars saying they will definitely be spending more.

• Client experience is not yet the focus of technology:  The role of technology in client interactions varies.   Most firms overall and Stars (67%) describe the technology experience offered to their clients as one where ‘tech aids but is not the focus of the client engagement experience’. However, one in five AdviceTech Stars (19%) and one in 10 (11%) overall firms say that technology is pervasive in all client engagement interactions, which is encouraging. Only a small group (22% overall, 14% Stars) say that technology plays a small part in the client engagement experience, or is not a part of it.

• Tech stack not yet integrated, although there is an real desire to do so:  The majority of AdviceTech Stars (84%) say their technology stack is only a somewhat integrated system of technologies, a sentiment echoed by just over half (58%) of all firms. Yet there is a clear desire to improve this, as only about half (53%) of advice firms and AdviceTech Stars (56%) are satisfied with their current technology stack. This sentiment is echoed by their staff, where only half of firms (54% overall, 56% Stars) say they think their staff are satisfied with their current tech stack.

• Largest beneficiaries of AdviceTech adoption this year have been clients:  The businesses that are working hard to adopt new tech into their firm are already reaping the rewards.  Although businesses report many positives from implementing AdviceTech, the largest beneficiaries of these changes are clients. When considering the business benefits of AdviceTech they’ve received in the last 12 months, the factors pertaining to clients were the most commonly reported (95% of advice firms cite this). Businesses state that technology has helped them to improve client engagement and communication (55%) and the quality of their advice (45%). Many are seeing improved client satisfaction (38%), and the ability to spend more time with clients (37%).

• Real benefits to advice practices and licensees from AddviceTech:  The benefits being received by clients are translating into revenue and growth improvements for the businesses as well (84% cite this).  Improved quality of advice and client satisfaction are leading to increased client numbers (46%) and revenue growth for businesses (45%). Some businesses have used this to grow their assets under management (29%), while others are harnessing technology to allow them to be more innovative (35%). AdviceTech has also provided cost and efficiency improvements for almost all (93%) advice firms. These have mostly come in the format of improved efficiency (68%) and a greater ability to scale and grow their business (50%). Other businesses say technology has improved their ability to manage compliance and governance (39%) or improved their profitability (38%).

• Staff satisfaction is an important outcome of effective technology adoption and implementation (usage):  The last main beneficiaries of technology in the advice business are of course the staff (81% cite this). The benefits to staff come in a number of formats such as better staff retention (32%), improved engagement (31%) and better staff teamwork (30%). Some businesses also report improved happiness in their staff  (28%), while a small, but still noticeable proportion say that technologies give their staff more spare time (16%), improved mental well-being (15%), and more time for creativity and innovation (15%).

How does Fourth Line stack up against the rest of the market?

Fourth Line is in the category of “RegTech solution for compliance and regulatory management”.

RegTech solutions are designed to provide oversight of regulatory procedures, regulatory surveillance, disclosure, and adherence to compliance rules.   The Guide found the benefit of platforms such as Fourth Line is they help to automate routine and manual activities, RegTech systems can help diminish the burden of adherence to regulations. In terms of risk reduction, sophisticated data analytics and forecasting features aid in pinpointing and evaluating potential risks prior to them becoming regulatory violations.

The Advice Tech Guide found almost 1 in 5 advice firms (19%) currently use RegTech solutions, and a further 19%  intend on implementing them in the coming two years. Importantly, AdviceTech Stars are more than twice as likely to currently use RegTech solutions (44%).

Fourth Line was the most popular RegTech provider according to the AdviceTech guide 2023.

You can download the Netwealth 2023 AdviceTech Buyers Guide 2023 here.

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Fourth Line is a rigorous RegTech risk management and compliance system for advice practices, dealer groups and other wealth management participants. Fourth Line uses algorithmic approaches to simplify the complexity in advice reviews whilst maintaining human oversight, empowering compliance teams to coach and develop strong advice behaviors through data-driven insights from advanced analytics for adviser, practice/dealer group and industry benchmark comparison with centralised document storage and access to meet regulatory needs. 

For information email: info@fourth-line.com.au