Vadim
Struk
Product Manager at Relevant Software

How to Develop Advicetech Solutions: Process, Types, & Features

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Financial literacy is in high demand today. The economic turmoil of 2020 has made us all thriftier but also more aware of how important financial planning is. Even TikTok, a platform dominated by lip-syncing and goofy dance moves, has become a place where young adults look for investment guidance. No wonder that advicetech solutions have become increasingly popular. These software products have what it takes to become the perfect answer to the needs and hurdles of today’s investors, big or small. 

Relevant has diverse experience in fintech, and we know exactly how to build advisory software that will meet both the client’s requirements and user expectations.

Let’s take a look at the basics of advicetech, its applications in fintech businesses, and the main reasons why more businesses are building these solutions. 

Advicetech solutions: Market overview & benefits 

Online financial investment is a rapidly expanding business. In March 2021, the popular social trading platform eToro announced that it had reached 20 million users. Australian advicetech provider Ignition expanded from the domestic market to Europe and the UK over just seven years—partnering up with the Bank of Ireland. Major UK high street banks such as HSBC are pushing for new and existing clients to use their platform to invest.

The message is clear: people are ready to put their hard-earned cash to work, and institutions and businesses in the finance industry are eager to accept it. So how does advicetech fit in? And what do these solutions bring into play?

A quick look at the advicetech market

The current market of financial advice technology may look saturated with advicetech solutions exceeding 250 names in the US alone. However, not all are all-in-one solutions—many of them are just separate modules in other types of software that financial advisors use in their day-to-day work.

Also, some advicetech software consists of solutions that cover only specific financial aspects like:

  • Portfolio management
  • Financial planning
  • 401(K) implementation
  • Investment data analytics
  • Risk tolerance

Only a small portion of the products currently available on the advicetech market offers a holistic approach to financial advisory. These usually contain a set of essential features like CRM, a client portal, portfolio and risk management, marketing automation, and so on. Some solutions gravitate more toward serving the client’s needs, while others are more centered around optimizing the internal processes of an advisory business. 

However, not all advicetech products enjoy financial success. Two UK robo-advice developers reported losses and shut their projects down in 2019 and 2020, seemingly due to poor design, implementation, or marketing. And this comes as no surprise. Robo advisory software development can be quite complex and usually requires hiring exceptional talent with relevant experience to create a product that works for both the client and the customer.

So, while the market seems to have a large number of advicetech tools, finding a balanced product to meet the specific needs of your business is often a challenge. That’s why many fintech companies choose the path of developing their own custom solution.

How advicetech solutions can benefit your business

There are many benefits of financial advice technology for investment and other financial businesses. Custom development of advisory software can help your business achieve the following:

Benefits of Advicetech Software

A better client journey

In a world driven by innovative solutions, investors expect a certain standard of relevance. By giving investors client portals with great design and user experience you can influence their engagement with financial products. Which logically leads to an increase in revenue.

Streamlined business processes

According to a 2021 report by Boring Money, financial advisors may use up to 16 different software products and vendors as their tech stack. In the course of custom advisory software development, all essential tools can be built into or integrated with a single product. Just imagine the robustness and efficiency of such a system, not to mention the reduced total cost of ownership.

Improved data collation and management 

Since open banking initiatives are slow to take effect in many countries, including the US, a lot of crucial investor data still exists in disparate silos. This creates difficulties for financial advisors. For instance, insurance and financial products are often sold separately to the same clients, based on different data sets and assessments of their financial standing. 

Advicetech solutions supported by open banking infrastructure and other regulations can significantly optimize the procedures of gathering and processing client data. 

Real-time decision-making

With all the necessary data readily available, making decisions on the fly becomes easy. Whether it’s up to a human or an algorithm, speedier investment choices are a competitive advantage for any financial organization.

New revenue streams

It’s unlikely your organization can ever muster enough manpower to serve investors of every caliber. With limited human resources, the lower investment range often goes to DIY or robo advisors. Now you can tap into that market with an automated solution of your own. 

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With its endless technological potential, advicetech can redefine the landscape of financial services, from micro-investing to wealth management. But let’s be more specific. What kind of software do you need, and what can you expect from it?

The main types of advicetech software

There is a wide variety of advicetech solutions that can be either targeted externally at clients’ needs or internally at providers’ needs. 

3 Main Types of Advicetech Software

DIY/Digital-only advice

The Do-It-Yourself/digital investing platforms allow individual investors to make their own decisions in managing their portfolios based on predefined algorithmic models. They normally have a low barrier to entry or no minimum amount requirements at all, and the fees they charge are extremely low. Users can invest in options, stocks, and mutual funds, and can access foreign exchange and ETFs (exchange-traded funds). No access to human advisors. 

Robo advisors fall into this category, offering the benefit of copying successful trading operations based on Modern Portfolio Theory.

The standard features of these platforms typically include:

  • Basic market research/analysis tools
  • Automated trading scenarios
  • Basic financial education/guidance
  • A web interface and a mobile app for convenient access

DIY investing platforms provide a robust digital service at the lowest price possible.

Hybrid investment guidance/advice

These advicetech solutions offer digital models, as well as human-led portfolio creation and guidance, allowing their customers to use an Individual Savings Account (ISA), pension account, or a General Investment Account (GIA). Many of these platforms will have a minimum investment balance of $500 to $100,000 and charge higher fees, starting from 0.05-0.40% of AUM (assets under management) to a fixed annual fee of $250.

The essential features of such platforms include:

  • Balanced digital investment packages
  • Access to a human financial advisor (included in a plan or for an extra fee)
  • A choice between more aggressive or cautious investing strategies
  • Smart 401(K) management
  • Automatic portfolio rebalancing
  • Tax-loss harvesting
  • An interactive dashboard, apps for web and mobile

Building any of the tools in these categories requires both custom web development and mobile app development services.

Software for advicetech providers

This includes several categories based on the solution’s internal components that are essential for providing advicetech services. Typically the set of functions correlates well with the average size of the business:

  • Solutions for small advicetech providers.
    Companies that serve up to 200 clients usually require:
    • Investment research tools
    • Project management functionality
    • Basic task management tools
    • Simple client portals
  • Solutions for medium-sized advicetech firms.
    Businesses that offer financial advice to up to 500 clients commonly need:
    • Communication and marketing automation tech
    • Client portals
    • Advanced investment research advicetech
  • Solutions for large providers.
    Features required by advicetech provider with 500 or more clients typically include: 
    • Advanced CRM systems
    • Social media tools
    • Advanced marketing tools
    • Activity, project, and task management functionality

Also, many business owners and other stakeholders are looking for ways to make their solutions as future-proof as possible. So they may request additional integration with AI, big data, extra customization features, and so on. Being early adopters of the most advanced technology, these companies set high standards for their software partners and often win big in the end.

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How to create custom advicetech software for your business

When it comes to building cutting-edge advicetech solutions, there is no one-fits-all path all companies should follow. However, some of the steps are proven and repeatable. We’re only providing a few here—for the sake of brevity and because your software vendor can better provide tailored information. 

User experience

To create a great product, concentrate on the user journey. Whether your web or mobile app’s interface is informative, intuitive, and overall a joy to use can make all the difference between a free trial dropout and a returning client.

Finding a partner and assembling a team

Of course, this is about technical expertise, seamless teamwork, and meeting deadlines. But it’s also about true partnership, similar values, and work ethics. So, look carefully, read reviews and client testimonials, and meet—be it over Zoom, Skype, or in person. An hour-long chat may tell you more about the people you’ll be working with than a stack of CVs and presentations. 

If you are looking for supreme quality at competitive rates, we recommend hiring a software development team in Ukraine. If you happen to choose Relevant, we can quickly assemble a dedicated team that will work exclusively on your project.

MVP development

A minimum viable product is not a prerequisite for starting a project, but it’s a step that we at Relevant highly recommend. Not only will you get a basic impression of your future product, but you’ll be able to receive feedback from a group of test users. This information will be worth its weight in gold further down the road. 

Organize software maintenance

When your advicetech solution is up and running, you’ll need regular updates and bug fixes. A reliable software partner should know what to do and how to stay on top of this. Look for companies like Relevant that provide full-cycle development services and can support your project—from the moment you brainstorm requirements to post-release maintenance.

To sum up

Advicetech has great potential for finance businesses. It offers access to new services and revenue streams and leads to improved client communication. More importantly, it does so with the speed and accuracy that modern financial decision-making requires.

Whether you’re looking to attract new customers, fundamentally reshape your business by adopting a cutting-edge advicetech solution, or build a white-label platform, Relevant is ready to help. When it comes to building functional and reliable software, we put our clients’ needs first and reach goals without taking shortcuts. Our team can guide you through the process, from planning and choosing the right technology to successful on-time delivery. So contact us today. Let’s talk about your new project. 

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Written by
Vadim Struk
Product Manager at Relevant Software
For more than 6 years, I've been working as Business Analyst and Product Manager at Relevant. I'm responsible for requirements engineering and management and solution implementation control.

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