Parmenion has launched what it claims is the UK’s first fully online simplified advice service, which is tied into its discretionary model portfolios offering and which it says is designed to support advisers to offer a lower cost service to mainstream clients.
The service an online process taking clients from an initial risk review through to a suitability report. The process is similar to clients receiving full advice, including demographics, risk tolerance, risk capacity and suitability letters and reports.
Parmention claims the initial process takes just 10 minutes. It said the software empowers advisers to make face-to-face advice more cost effective, claiming a nine-hour advice process can be transformed into a 45-minute meeting.
At the same time, firms can rediscover their mass market client bank on line, Steve Trott, proposition director, said.
The service points clients to Parmenion’s discretionary investment services, and they are able to log in independently and make amendments once an initial consultation has been completed. Advisers can introduce ‘kick-outs’ to prevent the consumer, for example, taking on more risk than they can afford.
Speaking to FTAdviser, Mr Trott, proposition director, said: “The risk profile is at the heart of the process. There are nine questions to answer and at the end there will be a risk tolerance figure between one and ten; most people are between three and seven. It also gives a percentage of what chance you’ve got of hitting the monetary returns the system has suggested.
“I have not seen the risk capacity element on an online system before. This is different to risk tolerance as it details risk capacity in seven questions as the system is trying to protect you from losing your money, unlike an execution-only system. If this comes out as the same figure as risk tolerance you are ‘good to go’.
“Advisers can build this technology into their investment models. There will be a fee for advisers to buy it and this will be announced at a later date.”
Mr Trott added: “We built the system to allow advisers to work out strategies - they can set certain ‘kick-outs’, passive or active investing. They can have whatever they want but the more solutions they offer the more decisions clients will have to make; it is aimed at the mass market of people who do not want to take full advice.
“We have been working on this since 2012 after the suitability advice paper came out. Simplified advice is about providing simple solutions that are online for people.”
The technology comes hot on the heels of the Budget’s ‘guidance guarantee’, whereby some providers have suggested technology will form the blueprint, and the regulator’s consultation into automated advice.
Parmenion said the new system is currently not suitable to provide retirement guidance, as investors can only invest via Isas and their general investment account. However, it did not rule out further development.
