The financial services landscape is constantly evolving. The only constant is change itself; some have termed the period we’re living in now as a perfect storm and with little over two months before RDR comes into force, attention has been focused on how ready advisers (and providers) are for the changes. The answer to this depends on a number of factors.
• Firstly, is your business going to be ‘independent’ or ‘restricted’ or offer flavours of both?
• Does your business use whole of market funds even if ‘restricted’ to providers / products, or has it also adopted a specific range of model portfolios?
• Do you know what service proposition your firm will offer and the corresponding adviser charges?
• Do you know which platforms / providers can facilitate the adviser charging profiles you’ve decided to use?
• Do you know how re-pricing will affect the actual value of your adviser charges, if they’re based on basis points?
• Do you know how all the above synchs with your attitude to risk profiling process, Capacity For loss (CFL) criteria, Synthetic Risk Rated Instruments, portfolio planning tool, back office system, automated valuation service and annual review process?
• What does your PI insurer think of it all? Do they give you a discount or pay your research tool subscriptions because they know the above is in place and are they prepared to share the reduced risks with you as a result?
The above might look a bit daunting – but there is help at hand and following core themes is critical to answering the questions and being able to sleep at night in the run up to RDR and beyond.
Independence and integrity
Is your firm using the ‘principles’ it’s developed or have you had to compromise them to fit the tools available in the market? Can you say with absolute integrity, that your investment management committee have been able to embed their principles and processes (e.g. active vs. passive / DFM vs. in house control) and can that be incorporated consistently throughout your ‘systems & controls’?
Some adviser tools allow firm’s specific ATR, CFL thresholds and Strategic Asset Allocations to be configured by head office and filtered down to branches and individual advisers. Some tools restrict you to their definition of risk categories.
Delivering real value
Are you sure implementing the tools you’ve chosen is going to reduce time and cost or increase it? Does your para-planner walk around with a smile on their face or scowl!?
Some tools have been designed from the ground up with para-planners, to make the annual review process as easy as possible, utilising contract enquiry, automated portfolio valuation statements, wherever possible. Some seem to have forgotten this and don’t connect the advice - to the administration - to the review process. Are you confident your firm’s tools are client review optimised?
Integration
Do the solutions you’ve chosen work together and have open integration not just one way but bi-directionally, even if your back office is bespoke?
A huge amount of time can be wasted if advisers and para-planners have to re-enter data or find it’s updated in one part of your system but not in the other. Does your back office system provider talk about them ‘owning the desktop’ or ‘the client and adviser owning the data’? If the former, how does this restrict your firm’s flexibility to evolve through RDR?
Content and confidence
Are the tools you’re using keeping up to date with the ‘real world’ issues your firm wants to know about? Are you confident the data is up to date and accurate? Do the providers endorse / subscribe to it? Are you more or less confident as a result?
Does your research solution help you to understand which providers you want to use can support different types of adviser charge facilitation? Are they evolving the research data to include the plethora of SRRIs? Does this help you understand how they may fit your firm’s investment process or not?
There are a lot of questions above, but like any evolving market, it will be those that can add genuine value and adapt to the changing landscape of the market that will survive. There’s a lot of standalone systems around, many of which are very good at what they do, but the one message I constantly hear from advisers is that they’re searching for the ‘solution that doesn’t exist’ yet.
Unfortunately, I’d have to agree there isn’t one solution that does everything, but at Capita Financial Software, we’ve made a clear statement that as our Fusion infrastructure develops this is exactly where we’re heading. Already, Fusion shares a single data repository and calculations engine across all modules. By the end of the year the product, fund, platform and off-platform research tools will be one modular solution allowing the user to research not only the features but also including ‘real world’ projections with your firms adviser charges; your special deals, risk category definitions and strategic asset allocations. Add to that the existing strengths of already fully integrated tablet ready protection illustrations and new business and hopefully you can see the vision becoming reality.
There are still many challenges to overcome but whether your firm will be independent or restricted, at least there’s now an integrated suite of modules that can be configured to reflect exactly the way you want to do business post RDR, without a big chip on its shoulder if you choose to integrate to someone else’s back office!
The requirement for such integrated advice packages has been evident in our relationships with SimplyBiz – licencing our quotation and research tools for all their members - and more recently, the development of bespoke technology for networks IN Partnership and Network Direct. Another, has even been offered our solutions free by their PI provider because they’re convinced firms adopting them will significantly reduce their exposure to risk. So, perhaps Christmas does come early for some.
CV - William Watling
May 2008 - Joined Capita as Business Development Director in Wealth & Distribution Services. Transferred to Capita Financial Software in Aug 2010 & changed to Product Director in August2011.
May 2002-May 2008 Business Development / European Professional Services Director of FIS, international software co delivering Life and Pensions product admin systems.
Autumn 99-Feb 02 Business DevelopmentDirector - Assureweb.
Previous Sales and IT Development roles with Synaptic Software, CMG and Commercial Union.
For more information or to arrange a demonstration, visit www.capitafinancialsoftware.co.uk or call 0800 783 4477.
