Technology: Put back office at the forefront

But over the past few years, as back office systems have evolved, particularly with the addition of front office functionality, my perspective has changed. In hindsight, I would have been wrong to be so dismissive.

Looking back just a few short years, advisers often used a back office system begrudgingly, often perceiving it to have limited value to their business.

In many cases, it was simply a place to hold Know Your Client information, a method of reconciling fees and commissions, and an online document repository. There were also of course, and still are, a percentage of advisers not using a back office system.

Fast forward to 2016, and with the Retail Distribution Review firmly in the rear view mirror, back office systems have evolved considerably to the point where effective adoption can catapult an adviser’s business to another level.

I do not know an adviser who does not want to work more efficiently; the adoption and effective use of a back office system is fundamental to achieving that goal

Of course the converse is true, advisers who do not put a back office system at the heart of their business, while embracing new front office technology, will be left behind.

Let us start with a definition of front and back office. I’ll go with Wikipedia: “A front office application is any software that has a direct relation to customers.

It provides functionality and the data necessary to take orders, configure complex products and effective service and support to customers. In turn, a back office application has no such direct relation. It provides functionality for internal operations.”

To put it more succinctly, I will define the front office as the part the client interacts with and the back office as the functionality used by the adviser.

As the functionality of back office systems has improved over the past few years, with far more front office, that is, client-facing functionality added to most propositions, such systems should be the beating heart of any advisory business.

Consider, for example, how the advances we have seen over recent years, can help to achieve the twin goals of improving efficiency and the client experience.

I do not know an adviser who does not want to work more efficiently; the adoption and effective use of a back office system is fundamental to achieving that goal.

From collecting basic data, through to risk profiling, product research, cash flow planning and suitability confirmation, the back office system should support the advice process every step of the way.

Of course, many of these tasks, for example cash flow modelling or fund research, are best done by specialist software designed specifically for that task. The efficiency lies in the integration between back office and specialist software, removing, for example, duplication of data entry.

Someone once told me that an efficient office meant that a piece of paper was only touched once. In these more modern times, an efficient office is now one where data is only input once.

Improving the client experience

For me, this is where the really exciting developments have occurred over the past few years. And the pace of change is only set to quicken.

Attracting and retaining the right clients is key to the long-term success of all advisers. In the past, most advisers have found client retention relatively simple, potentially leading to a degree of complacency.

Beware though, the world is changing. Think back a few years to when online banking was originally introduced. Some banks charged for it, and all of those who offered it used it as a differentiator. Now, it is expected – just look at the storm created on social media when the online system of a bank goes down.

In future, the same will be true for investors; they will expect, for example, online access to their portfolios and the ability to add in other assets so they can see their overall wealth, perhaps even the ability to trade themselves.

Those advisers who adopt front end, client-facing functionality, now offered by what were predominantly back office systems, will flourish. Those who do not, will be left behind.

I can already hear the reaction of some advisers: “My clients won’t log in”, “My clients aren’t online” or “My clients aren’t interested”.

Well, things are changing. Nowadays, 86 per cent of people in the UK use the internet on a regular basis. The number of clients who will expect their adviser to provide online access is increasing. So, by the way, are the percentage of advised investors who will consider changing their advisers if they do not get satisfactory levels of online interaction.

If you are sceptical, think about the benefits of providing such online interaction. Every time the client logs in, that is another touch point with your brand, differentiating your proposition from that of other advisers who do not offer such a service.

Security and client communication is another area where front office advances will improve the client experience.

We all know emails are not secure and are being targeted by scammers. A front office system that allows you to securely communicate with your client, has huge benefits, not least that it demonstrates you are taking the security of their data seriously.

Finally, a front office integration with a robo advice proposition (yes, I hate the term too, but let’s not get bogged down with definitions) could allow a business to broaden their offering to people who are not ready for, or currently require, full advice.

If you are persuaded of the benefits that such systems will bring to your business and clients, then how can you increase your chances of selecting the right option?

Get it wrong and you could make a frustrating and expensive mistake. But get it right and the system will become the heart of your business, powering you on to greater efficiencies, improved profit margins and happier, more loyal, clients.

I would suggest adhering to three golden rules:

1. Only consider independent systems. In other words, avoid proprietary systems developed by, for example, national firms, networks or providers of compliance services.

2. Resource is key. Advisers need to be assured that their back office provider has the resources, knowledge and desire to continually develop the system in line with the twin goals of greater efficiency and improving the client experience.

3. Speak to other users. All of the demos in the world will not give you a true reflection of what it is like to use the system on a day-to-day basis, only existing users, be they advisers, paraplanners or administrators can do that.

If I can leave you with one message, it would be to embrace the benefits of the online world; your clients will thank you for it and you will run a far more efficient business if you do.

Phillip Bray is head of marketing at Sense Network