From Cost to Value – Transforming How You Think About Advice Software
If you’re looking for a return on investment that goes beyond just cost considerations, upgrading your tech can be the ideal place to start.
By Ken Ong, Associate Director of Product
Coming out of the year-end break, it’s easy to get overwhelmed by the demands of a new year. From onboarding new clients to battling with dated systems that haven’t evolved with your practice, there are several concerns competing for the top of the to-do list. But advice software doesn’t have to be one of them – especially when your technology stack can save you dollars while saving you time. If you’re looking for a return on investment that goes beyond just cost considerations, upgrading your tech can be the ideal place to start.
1. Shifting Perspective: Software as an Investment Decision
In the quest for cost-effectiveness, financial advisers often undervalue the intrinsic value of software as an investment. Rather than viewing it solely through the lens of expenditure, consider it an essential tool that contributes to your business’ growth. The key question to ask is, “Are you reaping sufficient returns from the system based on what you are paying for it?”
2. Calculating Return in Software: Time Saved
Traditionally, the return on investment is measured in dollar terms, but in the realm of financial planning software, the currency is time. Efficient advice software should translate into time saved. Evaluate the hours saved per month and assess their financial equivalent. For instance, if you save 3 hours a month using a particular software and your professional charge rate is $300 per hour, then the monthly value saved is $900.
3. Assessing Cost Justification: A Practical Example
Let’s delve into a practical example to illuminate the concept. Suppose you’re using Morningstar AdviserLogic software and saving 3 hours monthly, equating to a value of $900. If the software costs less than $1200 per month, the investment is justifiable. However, if the cost surpasses the value saved, it’s time to consider alternative solutions.
4. Beyond the Bottom Line: Additional Benefits
While cost is a crucial factor, it’s vital to look beyond the bottom line. Consider the holistic benefits that the software offers. Does it enhance client interactions, streamline reporting, or provide insightful research and data analytics? These additional advantages contribute significantly to the overall return on investment.
5. Adapting to Changing Needs: When to Reassess Your Software
The financial advising landscape is dynamic, and so are your business needs. Regularly reassess your software to ensure it aligns with your evolving requirements. If your current system falls short in delivering maximum efficiency and value, it may be time to explore alternative solutions.
6. Making the Change: A Thoughtful Approach
Changing software systems is a significant decision. Before making the switch, conduct a thorough evaluation of potential alternatives. Consider factors such as features, user-friendliness, and scalability. Additionally, seek input from team members to ensure a seamless transition and minimal disruptions to daily operations.
In the pursuit of cost-effectiveness, financial advisers must adopt a strategic mindset, treating software as a valuable investment rather than a mere expense. By assessing the time saved and ensuring it surpasses the associated costs, advisers can make informed decisions that not only enhance efficiency but also contribute to long-term business success. Regularly reassessing software solutions ensures alignment with evolving business needs, guaranteeing that the tools in place continue to deliver the maximum value.
Ken Ong is Associate Director of Product – Financial Planning at Morningstar Australasia Pty Ltd.
Since its original publication, this piece may have been edited to reflect the regulatory requirements of regions outside of the country it was originally published in. This document is issued by Morningstar Investment Management Australia Limited (ABN 54 071 808 501, AFS Licence No. 228986) (‘Morningstar’). Morningstar is the Responsible Entity and issuer of interests in the Morningstar investment funds referred to in this report. © Copyright of this document is owned by Morningstar and any related bodies corporate that are involved in the document’s creation. As such the document, or any part of it, should not be copied, reproduced, scanned or embodied in any other document or distributed to another party without the prior written consent of Morningstar. The information provided is for general use only. In compiling this document, Morningstar has relied on information and data supplied by third parties including information providers (such as Standard and Poor’s, MSCI, Barclays, FTSE). Whilst all reasonable care has been taken to ensure the accuracy of information provided, neither Morningstar nor its third parties accept responsibility for any inaccuracy or for investment decisions or any other actions taken by any person on the basis or context of the information included. Past performance is not a reliable indicator of future performance. Morningstar does not guarantee the performance of any investment or the return of capital. Morningstar warns that (a) Morningstar has not considered any individual person’s objectives, financial situation or particular needs, and (b) individuals should seek advice and consider whether the advice is appropriate in light of their goals, objectives and current situation. Refer to our Financial Services Guide (FSG) for more information at morningstarinvestments.com.au/fsg. Before making any decision about whether to invest in a financial product, individuals should obtain and consider the disclosure document. For a copy of the relevant disclosure document, please contact our Adviser Solutions Team on 02 9276 4550.
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