Can the financial plan find a home in the “as-a-service” economy?

April 27, 2017 by Andrew King

A financial advisors as his laptop trying to bring his business closer to a financial plan

About the author

Andrew King

Team lead, solutions consultant

Andrew has extensive experience in agile software development, He works with technical and business stakeholders to develop requirements for improvements to Advicent products and business processes. He also helps match technology solutions with business challenges. His professional interest are in international business development and product positioning strategy.

Allow me to set one thing straight before I jump in: This is not meant to ponder whether financial planning software can be delivered “as-a-Service.” Indeed, Advicent has delivered SaaS-based financial planning technology for the better part of a decade. This sort of thing is the Urtext of any as-a-Service business model, including the one I set out to discuss. Rather, I want to push the envelope of the Anything-as-a-Service (XaaS) model and ask whether this can be applied to a financial plan. In other words, is delivering financial advice as a subscription-based service over the web a viable business model? Furthermore, why would anyone even want to do that in the first place?

Defining “as-a-Service”

Let us define a few terms before we get too far ahead of ourselves. The idea of “as-a-Service” is for businesses to reduce cost and become more flexible by purchasing a service from a vendor on a subscription basis. Take software, the original “as-a-Service” product, as an example. “Before the emergence of XaaS and cloud services, businesses often had to buy the licensed software products and install them on site,” explains Techopedia. “They had to buy hardware and link it together to create expanded networks. They had to do all security work on site, and they had to provide expensive server setups and other infrastructure for all of their business processes. By contrast, with XaaS, businesses simply buy what they need and pay for it as they need it.”

While XaaS business models are typically thought of in the context of B2B relationships, the concept can be found across a variety of consumer businesses as well — Netflix® and other streaming services are a great example. Something as familiar as a gym membership can also be seen through this light.

Can this model work for financial advice?

I am certainly not the first person to ask if financial advice can operate in the “as-a-Service” market. Some large financial institutions have tried this model over the past few years through both homegrown solutions and FinTech acquisitions. The early response to these attempts, however, appear to be tepid. It is one thing to have a bunch of users sign up, but it is another thing to turn those users into clients. It is yet another thing to turn any clients into raving fans. Yet, the opportunity is still there for the taking.

“Companies need to find new ways to increase value by leveraging technologies including cloud, automation, analytics, artificial intelligence, and mobile. These technologies have created a new "as-a-Service" business model where the whole is more powerful than the sum of its parts.” It may simply be that the technology necessary to support an “as-a-Service” financial advice model is only just hitting the market. After experiencing the results of the build-it-yourself and acquisition approach, however, the irony is that financial institutions may themselves need to turn to “as-a-Service” technology partners in order to successfully deliver their own “as-a-Service” revenue models.

Click here to learn more about leveraging Advicent technology in your workflows to help bring your firm closer to an “as-a-Service” business model.