Financial planning firms boost technology spending

KAREN JOY BACUDO

Finance Editor

Financial planning firms are increasing investment in technology, according to new research from Saltus Partnership Programme and L.E.K. Consulting. The study found 42% of firms are using technology investment to manage growth and regulatory demands.

That is up from 35% in the previous survey and reflects a broader shift in how firms allocate resources amid rising compliance pressures and day-to-day operational demands.

The Financial Planning Growth Index is based on a survey of 216 senior figures at financial planning firms of different sizes. Conducted before the recent escalation in geopolitical tensions, it also found broad confidence in business performance, with 74% of respondents saying they were confident about increasing revenues this year.

That confidence appears to be feeding into spending plans. A quarter of firms said improving operational efficiency was among their top three business priorities over the next one to three years, up from 22% in the previous survey, while 8% named digital transformation as a key priority.

The data suggest firms are focusing less on headline technology projects and more on practical changes to systems and workflows. Over the next one to three years, 34% said they planned to upgrade existing systems, while 24% intended to introduce new financial planning tools.

Smaller shares identified more specific areas for investment. Some 8% said they planned to invest in data analytics, and 7% were considering launching their own app or client portal.

The research also pointed to changes in how firms are organising work as they expand. Around 22% said they were spending less time on sector events, while 20% reported increasing their use of paraplanners.

These shifts suggest advisers are trying to devote more time to serving clients and managing business growth, rather than relying on traditional networking. They also show that firms are considering technology investment alongside changes to staffing and operating models, rather than in isolation.

Investment focus

For many firms, the emphasis appears to be on replacing or improving core systems already in place, rather than making large-scale bets on entirely new digital services. Upgrades to existing platforms were the most widely cited area of planned spending, pointing to a market still dealing with legacy processes and fragmented systems.

New planning tools ranked second, indicating that firms are also looking at software that could affect how advisers assess client needs, prepare recommendations and manage ongoing relationships. The lower figures for analytics and client-facing apps suggest that internal processes remain the more immediate concern for most respondents.

The findings come as financial planning firms face pressure to grow revenue while meeting tighter expectations around governance, documentation and oversight. Firms are increasingly presenting technology spending as a way to protect margins while handling those demands.

“Our research uncovers a clear direction of travel when it comes to investment in technology. We have seen first hand how modern technology can enhance the delivery of financial advice, to the benefit of firms and clients alike, and it is encouraging to see that so many firms are not only planning to increase their investment, but also have a clear strategy for doing so. This is testament to the resilience of the sector, which continues to demonstrate its ability to innovate and provide the best possible service to clients,” said Nick Heath, Head of Relationship Management at the Saltus Partnership Programme.

Strategic shift

The pattern of responses indicates that firms are becoming more deliberate about where and why they spend on technology. Instead of viewing digital tools as a separate workstream, many appear to tie investment decisions to profitability, workflow efficiency, and regulatory requirements.

That matters in a market where firms vary widely in size, ownership structure and operational maturity. Larger groups may have more room to fund upgrades or roll out new systems, while smaller firms often need to be selective about where spending will have the quickest operational effect.

“As the speed at which technology is advancing shows no sign of slowing, firms of all sizes cannot afford to be left behind. We are witnessing an important shift, however, where firms are treating investment in technology more strategically. By taking a long-term view, assessing the full suite of options available and setting clear guardrails, firms will be best placed to navigate the transition and unlock tangible value,” Bronswe Cheung, Partner at L.E.K. Consulting, said.