Tech spotlight: Shoot for the stars

It is only at times when the red box opens to unleash a Raiders Of The Lost Ark-scale barrage of unpleasantness that the proposition team can emerge, blinking, out of the shadows and into the light. I should know; having been one of that troglodytic-type myself in the past.

Building products is fun, sort of like slotting Playmobil together – only not as good. But what’s really fun is building the ancillary stuff around the products – tools, calculators and fluffy stuff that will lift your proposition into the realms of legend. ‘Shoot for the moon’, as a wise motivational spokesperson once said, and even if you miss you’ll land among the stars. Out of oxygen and dying a solitary, agonising death, but among the stars.

So in our time together this month, I thought we might take a look not at the new generation of pension freedom products, but at some of the tooling that goes along with them.

Tough tools

Tools and calculators are tough. You need to make them specific enough so they’re useful, but not so specific that they turn into personalised illustrations, because then it’d be an illustration engine and not a calculator. You need to walk the line between making it usable and keeping on the right side of the compliance line, especially given that you can’t control how advisers will use the output.

Most importantly, though, you need to try and work out how you can create something genuinely useful that will encourage advisers to use your product. And that’s where we find our main point of difference in the various toolsets that have emerged post-pension freedoms.

There are lots of these tools around; too many for a column like this. If you’re interested in them, I’d suggest signing up (if you need to) for a few and running through them. The actual process of using them is unlikely to be thrilling in itself – it’s a bunch of data input with a bunch of parameters which you can play with which leads to a bunch of output.

In between all that is maths, pure and (not so) simple. Each tool tries to take a different angle, and is integrated to a greater or lesser extent with other stuff that the provider may offer.

Let’s have a (deliberately) quick look at a few which might be of interest. This isn’t exhaustive.

First up is AXA Wealth, which offers its Life Planning Toolkit. This has three elements – a goal planner, a retirement income optimiser and a cashflow modeller which is effectively a light version of Voyant.

I’m normally a bit of a cynic for provider toolkits, but I actually like this. You can enter multiple goals, muck around with all kinds of parameters and then see the results. The toolkit dumps down its output into a ‘handy client report’ and I haven’t seen that so can’t comment on whether it’s nasty or nice. In terms of having a free playset to do some basic scenario planning which can include income and cashflow modelling but doesn’t have to, this looks the part.

The criticism I have is the same as for all these systems – data entry is still onerous. Each investment needs added; there’s no link to a CRM or even something like Moneyinfo from Sammedia to pull through details. AXA is absolutely not alone in this. But if advisers are really to pick up these tools and start using them in anger, then rekeying data starts to be more of an issue. That said, if you’re a Voyant user the details will flow through. This is worth a look.

Somewhere up the other end of the country, Aviva recently launched its Retirement Forecaster, built with Distribution Technology (DT). Aviva is very careful to show that the numbers inside the tool are driven by DT, and there’s no bias in there. I saw an early version of this, and from what I could tell that was – whisper it – true.

What makes it different?

Again, this is a fun bit of kit. In terms of what makes it different – well, it uses three stochastically modelled market return scenarios for each case, rather than one central assumption. That’s a good discussion point with clients. It does a pretty good job of pulling in relevant information without going to the finest degree of detail, and that’s a hard balance to strike. And its outputs are as good as you’d expect for something powered by DT.

In terms of drawbacks – if you don’t like DT risk profiling then you won’t like this. Similarly, if you like cashflow graphs to look like Voyant then this won’t be for you either. It also comes with a 28-page client guide on how to read the report. But this stuff is hard, which is why you need an adviser, and these tools are designed to be a ‘do it together’ type deal. So again, what it does, it does well. Like the AXA tool, it’s free behind the firewall, and worth checking out.

Some advisers will be naturally suspicious of free tools from providers. Never fear. if you don’t like the idea of a provider-specced tool, there are others to choose from.

As you’d expect, DT has a retirement income modeller as part of Dynamic Planner. Its ‘Living In Retirement’ module allows you to show annuity/drawdown splits and cashflow impacts, among other things, and if you’re in the DT world then it might well be useful.

I’ve also been interested, recently, to see a new tool in development from Focus Solutions – these are the folk behind Focus 360 (pictured above), which is a CRM/back office system used by a number of very large restricted firms, but not so many smaller independent ones.

Focus has an ambition to increase its footprint in that area, and to that end is creating an integrated toolset in conjunction with Moody’s. The first bit to be released is a Pension Income Modeller.

In one sense, what Focus does is not dissimilar to the others – there are only so many ways to model out retirement income – but there are some interesting differences to the product provider versions. For example, this will (most likely) be a paid-for service – I don’t know pricing yet. Once you’re in paid or even freemium land, you have some quite different dynamics.

For example, a firm might say ‘OK, hotshot, I don’t like XYZ about your tool, and given that I’m paying I’d like you to bespoke it for me’. Focus intends to offer that (clearly at a higher cost) – so if Moody’s asset allocation isn’t your bag, you’ll be able to take it out and plug in something else.

That means you can tailor it a bit more to your own existing process. You’re still rekeying (although you can see where this might go in future), but at least your risk approach or your asset allocation approach might carry through. With free tools – well, it’s free, innit? What do you want, blood?

Expectations

So there you have it. I’d expect the other back office / CRM systems to either have toolsets live or to have similar things in development. If you need something to help with the ins and outs of pension income modelling and whatnot, you have no shortage of places to turn.

Provider-sponsored, or paid-for from a software house; leaning to cashflow modelling or leaning to realistic market return scenario planning. It’s all out there, and that’s rather nice to see.

Mark Polson is principal of platform and specialist consultancy the lang cat