Nick Eatock, founder and CEO of Intelliflo, talks about the impact of technology adoption on adviser revenue and productivity. We spend some time on tech integrations and security and end with thoughts on how technology might increase access to advice.

You can listen to the full interview below.

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Transcription of conversation.

Heather  0:34

Hey, there, it’s Heather. You’re about to hear a conversation I recorded with Nick Eatock CEO of Intelliflo  in early May. Nick tells us about the impact that tech adoption can have on advice from revenue and productivity. We spent a bit of time on integrations and Nick challenges advisors to tell tech companies including Intelliflo, when integrations don’t work so they can build the needed API’s. We cover security and we end on a positive note talking about the power that technology can play in increasing access to advice. I’m sure you’re going to enjoy the conversation.

Nick, welcome to the podcast.

Nick  1:11

Hi, Heather. How are you?

Heather  1:12

Yeah. Great. Thank you, I hope, well, we talked a little bit before we turned on the recorder, and everyone’s safe and well, yeah,

Nick  1:19

Yes, most important thing, definitely.

Heather  1:21

Great. I know that everyone listening will know who you are. And you have the fortune of not having changed jobs every few years, in the last, was it 15 years since you joined Intelliflo?

Nick  1:32

Yeah, I have not changed employers in the sense of Intelliflo. But I’ve changed my job role a few times, chairman and then back to CEO about six months or so ago.

Heather  1:41

So, I wanted to talk to you for this podcast about a few different things. But if we could start by talking about tech, and the role that tech can play in helping to increase capacity for financial advice, because I think everybody that I talked to in the market is pretty passionate that the best way to bring more people into investing and to ensure better financial outcomes for people is to put them in touch with quality financial planners. But we probably have a bit of a capacity issue. And I know that you guys have done a lot of work, including publishing an E advisor index that we wrote about on our NextWealth Directory, where you talked about the role that you saw that technology adoption plays within firms in increasing capacity. And can you talk a little bit about what you’re seeing and thinking there?

Nick  2:30

Very much Heather, the reason the advisor index came about really was because we wanted to, we got a little bit bored in truth about talking about return on investment, because return on investment is one of these things that is a tried and tested way of talking about the difference that technology in particular makes. But very often, it’s quite difficult to get underneath the skin of actually the efficiencies that businesses have put in and to do that on mass in a sample set. That makes sense is very, very tricky. So, what we thought was, well, why don’t we look at this the other way around, because what have we got, we’ve got access to an enormous amount of data, about 2.3 billion clicks a year of our software. And that was as of last year, so it’s up on that. And we’ve also got access to the number of clients, for example, that an average advisor is actively servicing, the revenue they make, the assets under advice, and so on. So we’ve got a lot of data that we can look out across the marketplace as a whole, you know, we’ve got 36% market share in the advisor community, so that represents a pretty good sample set of the industry or profession as a whole to look at.

So, what we did was we said, right, let’s take the data where we can see very clearly how well people are utilising the technology and how well they’re adapting or adopting various bits of the technology capability for their own businesses. And how they run their business and how they service their clients. Let’s take that on the one hand and let’s categorise businesses by how well they’re doing that just in terms of the technology adoption. And then on the other hand, let’s look at the business metrics that they’ve got that we can absolutely gain access to. So, things like revenue, and so on recurring, upfront revenue and all of those and see if there’s any correlation. So, we did that work. Just over two and a half years ago now, when we did the work internally before we launched it more formally in summer of 2018. And the results were completely startling even for us, we’d hoped that there would be some good results of this, but they were just fascinating.

Just the direct correlation was almost a one for one between adoption and business success in that sense. So, they were so good that actually what we did was we went to a third party, Ernst & Young to just kind of check our homework and you know, ensure that we’ve been taking the right view and analysing it properly, and so on. And they concurred with the data. We followed that up in 2019, to see if things were improving. And they did. And, you know, we’ve got sort of about 200 firms out of our two and a half thousand at that point in time were in our, in what we called the champion status of technology adoption. That didn’t necessarily mean they were great firms, it meant that they adopted the technology really well. But then when we looked at how well they were doing in terms of those business metrics, we saw that on average, if you took that entire group, they were better than every other sort of area in every other type of advisor, the lower adoption of the technology, in terms of things like actively serviced clients per advisor, they were typically 220 clients per advisor on average, versus the sort of the average right at the other end of the spectrum, which was nearer 100. So, this was a real clear-cut proof for us because the sample size was so wide, that actually software can make a difference.

Heather  6:02

Can you tell me a little bit more about what it is about the adoption? What sort of things were those firms? What does that adoption mean? It’s not just about using lots of different pieces of tech. Is it about embedding it in the business? What specifically do you mean by adoption?

Nick  6:16

I think all of these things are about journeys and processes that actually end up delivering results, whether those are client facing results, or whether those are business facing results because you’re doing things more efficiently. So, what we did was in conjunction with our customers is we looked at five key pillars of usage of the software. So those were things like our valuations, our income, reconciliation, compliance is kind of interwoven into all of that and the data quality debate. Then we had document designer in terms of producing output for clients and so on and we had the client portal PFP on top of that to be the kind of the interface if you like, so for many clients at the time, and even more so in the  current circumstances. And so, we took all of those five things together and looked at specific elements or functionality within those that actually we thought were best of breed in terms of usage. Both from what we’ve seen, because we talk with our customers about how they use the technology, and they talk back to us about the things that they like, and the things that they haven’t managed to get to work and so on, so it was a combination of all of those things brought in to understand what the best in our view, or at least the best usages of the software, then we give everyone a score, a tiny little score for each element along the line that they get to. And the combination of all those scores. Basically, for any single advisor firm, it gives them a status, or a ranking of the advisor and they can be in one of four segments.

Heather  7:51

Can be they find out which segment they’re in.

Nick  7:54

Yeah, yeah, not very much so yeah, so  they all know what segment. And they all actually know what score they’re in. We don’t we don’t publish everyone’s score on the web front or anything like that. But every individual firm knows what score they’ve got. And very many of them come back to us and say, that’s great, we’re at the second tier now, how do we get to top tier? And, you know, we look through our customer success teams to help them get there.

Heather  8:21

One of the questions I’m asked about is whether spend correlates to efficiency. So, if firms that are spending more on tech, whether that helps, and when we looked at this last summer, in a survey, we asked spend as a proportion of turnover on tech compared to satisfaction, and we saw no relationship at all. And it doesn’t sound like that’s what you’re looking at either.

Nick  8:44

Yeah, yeah, I don’t think it does. And actually, you know, if we look at those firms at the time, the 200 odd firms that were in the Champions status, many of them were small businesses. So, they’re not necessarily enterprise level businesses that have may be able to invest heavily and so on. The thing is, it’s less about spend, it’s about adoption. You know, if you adopt what you’ve got, then I think you’re in a good place. And fundamentally, that’s also now, given what’s happened over the last sort of six or seven weeks for everyone, actually, that’s been significantly enhanced as people are spending, some businesses are spending the time now, or spending some of their time now to understand how they can adopt further,   making use of the time that they’ve got.

Heather  9:31

You mentioned the importance of PFP in particular at the moment, and that’s something that we’ve heard as well that client portals have become a really important interface for the advisor with clients. So, what changes you’ve seen to the advisors using your technology at the moment?

Nick  9:48

Yeah, client portals are interesting because, client portals in most senses didn’t really exist when we go back sort of five years or so they weren’t really utilised at all in the marketplace, and we’ve seen a couple of waves of adoption of the technology, GDPR actually, just about two years ago, was a significant upturn in how people were looking at using client portals to ensure that the information they had about their clients, the information they shared with their clients, and the information they got back from their clients, was all done in a transparent but secure way. So GDPR was a big sort of turning point in that sense. And then most notably here, with the COVID-19 environment that seen an even bigger uptake, it makes GDPR day look pretty small, really in context. So, usage of our PFP solution, for example, is about 230% up on a monthly basis. So that’s just been staggering. And we’ve got lots and lots and lots of customers of ours who just said how invaluable that service has been to them. And we talk a lot about this we have got a Coronavirus support page on our website where we look to try and help people with understanding what they can do. We try to make it much easier for them as well. So, there’s elements of the client portal things like our DocuSign integration, things like our video conferencing integration with Glia, both those things we’re making entirely free up until the end of June.

Heather  11:26

And I think that’s one of the things that people hopefully will remember is how people behaved through the crisis. So I want to get onto the thorny topic potentially of integrations is actually where this conversation stemmed from because you and I were having a conversation about a week ago about integrations and data standards and when we survey advisors and when we get reviews on our NextWealth Directory about technology, the frustration across the board is around integration, when we aggregate the results up to a candidate Level platforms, back office systems, cash flow modelling, everybody gets the lowest score across the four criteria we look at for integrations. And a lot of times advisors are pointing fingers towards back office systems, thinking that that should be where that solution comes from. And I really want to understand from your perspective, what’s going on there? Where does this frustration come from? What’s the solution? How can we fix this?

Nick  12:25

So firstly, I think I should say that, integrations and the way in which the different software suites and other solutions that advisors use is really super important in the marketplace. So, we are full backers of that. We’ve maintained an open architecture and best of breed stance in terms of integrating with many cases, our competitors all the way through since we started the firm back in 2004. So, we think this is really, really important.

The way in which those integrations happen has changed over the years. So in the in the kind of the olden days, sort of going back 15 years or so, integrations used to be achieved by both parties, whoever they were, maybe that’s a back office provider or a practice management providers, we’d call them now integrating with a platform, or with a, another software product, or whatever it might be, it would, it would start off with a project being created by those two and a definition around the data standards to try and integrate those two solutions together, ramping up development teams, and a project manager and all of that kind of stuff that you’d expect it to go alongside with that. And those projects, you know, would take anything from three months on a good day to 15 months on a not so good day. And then the solution would go live. And it would turn out that you’d need to build some extra staff and then something would go wrong at one end, and it’d be difficult for both parties to maintain those integrations.

And actually, that lesson is probably quite similar in technology terms to what happened with web services in the early 2000s. So, web services are a kind of a global way of operating and trying to get different systems to talk to one another. And the approach at that time was about web services alongside what’s called schema standardisation, which is about getting the data standards to work. And it didn’t work in the rest of the world either. You know, this isn’t a challenge, particularly focused on the advice industry. What has happened in a more global sense, actually, is that web API’s were created a RESTful API, RESTful APIs have completely succeeded where those data standards didn’t. So, you know, if you think about the technologies you use today, so Zoom, we’re all using, many of us are using today. They don’t have any data standards. They just have API’s. That’s all they do. Google Calendar you know integrates through API’s only. There is an iCalendar data standard, but no one used it, it’s all about those API’s.

So, what we tried to do was create a set of APIs’ that any firms could use to integrate with our technology, which was a big architectural change for our business. But it’s become kind of a norm now in terms of every evolution of our solutions. So today, we have 228 API endpoints, which is a very large number of API’s, we have 37 million API calls every week. So, there’s a lot of communication going on, which we think facilitates where the future direction of integration is. We created an I/O store to allow third parties to integrate with us and we’ve got 58 third parties live on the I/O store today.

So, we’ve created much of the engineering if you like to enable this to happen. I think the bit that’s missing now is the quality of those integrations. And that’s where we need help from the advisors as well here to help us and that’s both parties, it’s us plus the platform or us plus the software, or the third-party software provider to say, yes, you’ve got an integration. But it doesn’t integrate this data and that data point. Certainly the API’s we think, are pretty wide and rich now, but the thing we have observed is that not many of them are used by all partners, there are some parties who do use more, but there’s a number of parties who don’t, and we want to work together. You know, we want to work through this as a collaborative approach to ensuring that fundamentally, advisors should be able to choose the technology solutions and the platforms and other solutions that they want to knit together for their business, not be restricted, if you like by a subset of the ones that work really well.

Heather  16:49

And that’s what I hear from IFAs we have talked a little bit about at NextWealth is how we’re seeing some firms going to single source because of the challenges of making the integrations work, but most would like to be able to choose the best piece of technology for the job that they’re doing, and have that integrated across their tech stack. It sounds so compelling what you’re saying. But then when I think what the advisors are telling me, and maybe it’s just that they need to feed this back into you, what I hear from advisors and other providers is that if we have agreed data standards, and those API’s are able to speak to one another, so Google Calendar has their standards around how to read a date format. And so, Zoom can integrate with my Google Calendar because it’s able to read the date format. Do we not need data standards, in addition to these open API’s to make them work effectively?

Nick  17:41

We’re in danger of getting terribly geeky, here. I hope your listeners are up for the journey but how dates are recorded is more is not a data standardisation, that’s about standardisation about data types, you know, what does a date look like? What does a currency field look like? The actual data, no one really integrates by that method globally at all, they integrate via API’s. Yes, there is a standard way within API’s that dates are represented. But there’s no data format. And one of the big reasons there is because systems change so frequently, the data formats under systems change, you change incredibly quickly. So, you very quickly get to a situation where data formats will be out of date, whereas API’s are the bits that are used to build the technology. They inherently are there in place and level with the upgrades that have happened, and that’s why they’ve been so significant.

Now, I think the key thing that isn’t needed now is the two parties that are involved in an integration by the API’s is for the advisors to absolutely tell us based on the integration that we’ve done so far, how much further, how much wider do they want that integration to be in that particular example. And if that requires us at Intelliflo to build more API’s to facilitate that, we’ll do that. We’ve done 228. And so far, if we need more, we’ll build them. In fact, we’ve got, I think 456 in progress at the moment. So that includes the 228 in fairness, but it is evolving hugely. What needs to happen, though, is they need to be utilised.

Heather  19:31

And I think that’s one of the things I’ve heard from platforms as in the past, they might have invested in this and it wasn’t used and so it has to be used by the providers, but it also has to be used by the advisors once available. And I apologise for that little bit of knowledge that’s dangerous, a bit brutally exposed. You were very gentle, thank you. I want to move on to the current crisis, the pandemic, you talk a little bit about what you’re seeing, changing. Some of the conversations we’ve had for the podcast, one of the things that’s come up is cybersecurity and phishing attacks and this question of are small businesses potentially more vulnerable, are all businesses potentially more vulnerable at the moment, because people are working in different conditions, potentially unsecured Wi Fi networks at home, what have you. And you and I have talked a little bit about cybersecurity in the past, what are you hearing from advisors? And what are you thinking about at Intelliflo?

Nick  20:28

Well, it’s clearly, it’s always been important, right? But it’s even more important now, as the global upsurge in the use of technology is incredible. And I think, a lot of this is set to stay, some will revert back to previous practices, but I think, in most cases actually we will continue to use a lot of this technology to run our businesses, run our interactions with clients and so on. So, the security about those is really important. And as a small IFA, the reality is your opportunity to invest in all of the security that you would need to if you were doing all of this sort of standalone yourself is pretty limited, financially this is expensive stuff to get right.

And that’s really where advisors, not just small advisors, but medium and large ones too, need to be able to rely on their vendors, the people they outsource services to, to do that job. So, you should due diligence us to ensure that we’re doing the job that effectively you need to and the regulator’s pretty clear on this as well in terms of cloud outsourcing in particular. So, we invest a lot of money in getting that right, we have regular, what are called ethical hackers go into our solution to try and see if they can they can break it. Which is fantastic, because it ensures that you know, we’re able to ensure the safety and security of what we do. We released a multi factor authentication or dual factor authentication capability just in the last week or so in response to many requests from users. And we were wanting to do this stuff anyway, it was just quite a big build. But we got that live now. I think these kinds of approaches are super important in the marketplace.

Heather  22:23

You mentioned due diligence on providers. It’s always a real challenge for firms who are doing due diligence on providers to know what things they need to be asking for because they aren’t experts on technology as they are experts on financial planning. Are there things that you think that should be included in due diligence exercises, either that you’ve seen in some but not others, or that you haven’t seen?

Nick  22:48

It’s a really good point Heather, because the reality is, is the bigger advisory organisations tend to have more access to resources to ensure that they do proper due diligence and they’ll engage with third parties and so on. And I do absolutely accept that that’s much more difficult for the majority of advisors in the country. But that that doesn’t mean that you don’t have a requirement to do so or responsibility to do so. But obviously, you can do it to the level to which you can get there are various resources on the web that can help you ask some of the questions perhaps you should ask. I think there’s also some safety in numbers here, you know, in the sense that if big organisations have validated the software and partners that you use that does give you some degree or it should give you some degree of comfort, but you still need to evidence some of the questions yourselves.

Heather  23:45

We often think about how much more we want technology to do. And as you know, I’ve said it too many times before. My favourite article I wrote for Money Marketing when I was at Platforum, was the interview I did with you and I’ll share it when I put this up on our website. I’ll put a link to that. There was something you mentioned in that interview about data costs. And when you first launched, I think it was when you first launched Intelliflo, the data costs from the ISPs were higher than what you were charging for using Intelliflo. And I think that’s such an amazing reminder of just how far we’ve come, not just in terms of data and access and everything, but just how much technology has transformed our businesses.

Nick  24:26

Yeah, that was back in the day when you could hear dial up, it made the funny sort of squeaky sound, that you’ll remember, but that’s all the thing of the past for all our young listeners here today.

Heather  24:37

I would get nostalgic for that sound, except it was really grating. Great, that’s one of those sounds, the record player lifting off the end of the album that I still miss, but the sound of dialogue, I’ll leave behind. And that’s looking back to early in the days of Intelliflo, looking forward other tech changes that you see around the corner that you’re particularly excited about.

Nick  25:00

Yeah, I think there’s a lot of things that are going to happen in the world of business intelligence and artificial intelligence. And that’s just Intelligent Automation to help us understand our clients, our businesses, that much better to almost interrogate the data in an informed way to help us. Now, that doesn’t mean that the world of Robo advice and robo advisors replacing regular advisors is anywhere soon. I genuinely don’t believe that. But I do think that as advisors, we’re going to rely on information and informed information in a way that we haven’t done before, and that’s going to be possible because of the technology. Big Data is definitely going to help us with that. There are some really incredible innovations that are happening across the globe. In that sense, we’re in discussion with a few organisations on that score that we think will provide some really interesting, BI and AI type capabilities. And this isn’t crystal balls sort of 5/10 years out, this is a year or two out it is that kind of timeframe.

Heather  26:15

That’s a really optimistic and we can leave our listeners dreaming of that future. And I agree with you about the role of the human but powered by machines. And I think that the last few weeks have reminded us how much we do like human contact.

Great. It’s been really lovely speaking to this afternoon. Thanks, Nick.

Nick  26:36

No problem Heather, lovely to see you.

Heather  26:40

Thanks for listening. I hope you learn something new in that conversation. I know I learned a tonne. Nick challenges advisors to use the integrations that exist and to report any shortcomings to tech companies. We’ll be covering integrations and tech more on future podcasts. Stay tuned as we unpack this topic further. As always, please do send through feedback and comments and any suggestions for future topics.