2024 Advice Tech Insights

With the AI excitement of 2022 and 2023 and the launch of the first generative AI tools, 2024 came down to a more practical implementation of AI, data management and experimentation for small firms and big firms in the financial advice industry.

Key industry themes and issues that tech looked to solve were:

• Consumer duty, implementation of reporting and regulation
• Acquisitions continued despite greater scrutiny in data and compliance due diligence
• Firms looking for productivity solutions to reduce effects of inflation and regulation profit squeeze on their businesses.

With these key themes, a new generation of technology and entrepreneurs have seen opportunities to help solve problems starting from summarising meeting transcription through to automation of communications and AI led data management.

As with any new technology, time and investment on both sides are required to help users embed and adopt it into their daily flow.

Here are our key insights from the year in advice tech;

• Implementation of AI solutions rely on strong user experience (UX) which is what sets it so far apart from older technologies. For the financial advice industry, the simplified UX reduces the effort to adopt and interact with tech significantly cutting down user training time and the need for lengthy procedural guides, a win-win for both the providers and users.
• Integrations remain a challenge, where tech companies with available public APIs as well as functioning offerings remain few and far between. What has improved is the acceptance that integrations are important. Increased pressure on legacy tech and investment providers to invest and enhance is being felt.
• Recognition of data quality issues impacting downstream business productivity, client outcomes and exit opportunities. Data remains the industry’s greatest blocker to these outcomes. A firm without a data strategy is floating adrift.
• Meeting transcription with AI summaries are becoming the norm. If you’re looking to recruit staff from other advice firms, be prepared for an AI policy to be expected. It will be difficult for many advisers and staff to go backwards soon.
• But with great power comes great responsibility. Supplier due diligence on AI and data providers is of the utmost importance. As is the understanding of of AI’s impact on your data and your data’s impact on AI. For example, using a new AI provider sourcing 3rd party data, leaves an advice firm with a key dependency on their data quality, system and API up-time and quality of models. Something none of these systems can assure (yet).
• Awareness of data quality’s risk to AI solutions. Automation depends on quality source data to ensure the realisation of actual efficiency - or LLMs need to be trained on quality industry data. Both of these routes to efficiency are limited by the existing data quality in the UK financial advice industry today. If we do not prioritise this as an issue and dependency, we risk teaching AI models based on bad advice records and finding generative AI tools will rapidly degrade.

Specific tech highlights of 2024

• Plannr and Seccl’s deep account opening integration
• Timeline’s announcement of their new platform to reduce the overall client product and investment costs along with a number of other low cost platforms emerging and enhancing such as P1, Fundment and Wealthlink
• Launch of numerous AI meeting note summary and productivity tools
• Transact’s engagement for deeper integrations into back-office and other advice technology solutions

In numbers, we’ve tracked 43 new tech companies enter the market with a new or beta solution in 2024. Of these, the majority are in productivity tools which categorises products that seek to solve a particular problem and enhance efficiency in the financial advice process.

New AI tech took the shape of either embedded AI within existing products or a new tool specifically focused on providing AI driven features to the users. Of the latter, there were 10 new solutions that we tracked launching or expanding in 2024. We expect in 2025, a similar number of new entrants, but more keenly we watch how those existing players navigate the expansion of their products, integration with legacy technology and user adoption.

In technology M&A, we saw acquisitions from Fintel (IFA dash and Synaptic Software) and FE Fundinfo (AdviserAsset). Abrdn sold Focus Solutions to its management team and Iress sold its UK MSO Mortgages business as well as portfolio management software Pulse, it had purchased in 2015.

What to expect in 2025

As 2024 was a year of experimentation for many firms, small and large, we expect the following themes to be adopted:

• Firms venturing into AI tools from other sectors, for example, marketing, lead generation, HR/payroll and accounting.

The opportunity to reduce business overheads and fixed costs on operations has never looked better. New SaaS and AI tools and services have emerged providing cost savings opportunities (thanks to VC backed disruptors) that are getting better and better. For the lean advice firm, capitalising on these tools will become essential.

• Consolidation and Mergers and Acquisitions will continue, but there will be a focus on quality

With increased regulatory pressures and more mature Private Equity backing, acquirers are more experienced and savvy. This will mean, good businesses will be sought after, and businesses with poor performance metrics will suffer with heavily reduced valuations. Better access to data and new tooling is making this process easier for acquirers, meaning firms looking to sell, need to equally invest in getting their shop in order before entering the sales market.

• Improved APIs and integrations from product providers

2025 won’t be the year for “full API integration”. But there are a number of programmes where providers are creating and enhancing their APIs to allow for deeper and wider integrations such as Account Opening. Given the industry API stand-off between building integrations and APIs, the immediate benefit will come from start-ups that can build integrations and adopt new APIs quickly.

• AI systems to be adopted by larger firms

Many if not all larger wealth managers, networks and nationals have been trialling new Advice Tech in 2024. Next year, these solutions will get rolled out to more users in these larger businesses. This will create a challenge for compliance teams that are already feeling the heat from the FCA  in unrelated areas. Expect new AI entrants, and existing ones to be the talk of the town.

To view the full Market Map 2024 Advice tech report, click here