Which back office systems should you use?

Remember the days that mobile phones looked like bricks and were reserved for the wealthy and important? Now it is considered unusual if you do not have the latest mobile phone. We can check emails all hours of the day or night, make notes during conferences without pen and paper, and have instant access at all times to a calendar.

Depending on your perspective, technology seems to have streamlined, or hindered, our lives. from an adviser’s perspective there is no doubt that this evolution has enabled them to streamline processes and be more efficient in doing their jobs.

For example, sending mailing lists was a laborious task in the early 80s. According to Ian Lowes, managing director of Lowes Financial Management, advisers would have to photocopy a pre-typed batch of addresses onto labels, stick the labels on the front of the envelope and non-personalised letters would have to be photocopied.

All that has now changed, with the rise of databases, platforms and software; all built from the ground up in the last thirty years. And that is just the tip of the iceberg in terms of changes in the systems and processes advisers are now using.

What are the options?

Altus Consulting says there are four major players in the core back office market: Iress, Intelliflo, Time4Advice and Focus Solutions, with Iress leading the market in terms of market share. There are also specific systems and services offering everything from product comparison to performance data.

Simon Bussy, Altus’s senior consultant, notes some suppliers have broadened their footprint and can no longer be pigeon-holed as purely back office systems. “They now offer a more engaging client management system and other functionality.”

Jo Gilbey, marketing director at Intelliflo, believes the best-web based systems have now morphed into full business management ‘eco-systems’, which are not compartmentalised into front, middle and back office functions.

“They provide a seamless way to service clients, manage all processes from lead generation and marketing, fact finding, regulatory reporting, accessing accurate MI, to tracking fees and income – all the elements that are essential for running a professional, profitable financial advice business.”

Other capabilities of back office systems include only entering client and policy data once, providing a single view of client holdings, supporting payments and management information requirements as well as a reduction in compliance and therefore professional indemnity insurance premiums.

Mr Bussy says: “Each adviser follows a very robust and consistent adviser sales and servicing process, built to meet customer needs and importantly, FCA requirements (e.g aligning the investment proposition to the client’s risk profile, investment time horizon and proposed asset mix.”

What do you want to achieve?

Chris Baigent-Reed, consulting director at Jigsaw Tree, says that when they first talk to firms who may need to replace a customer management system, the first port of call is finding out what an adviser’s technology strategy is.

Mr Bussy agrees and adds that “very few advisers” appear to use the full functionality available in the systems, which demonstrates the importance of having a “clearly articulated operating model”.

Ms Baigent-Reed says: “Our view is that technology has to be an enabler. What advisers are looking at is how they can serve their clients better, more cost-effectively which allows them to go across all segments.”

Not all advisers are clear on what they want to achieve or how to achieve it. “Often where we start with a firm and where we finish are two different places because of the things that haven’t necessarily been considered”, Ms Baigent-Reed says.

Advisers have to consider what needs to be configured, what the IT architecture and structure of the whole business is and the programme of work to integrate the various systems, Mr Bussy adds.

Not a one-stop shop

Mr Lowes says: “There is no back office system that is available that does everything we want it to do. Most have been built to cover the needs of 80 per cent of advisers and you can find people who rave about certain systems whereas others swap from one to another to get improvements.”

Lowes Financial Management uses Avelo Adviser Office as its primary back office system, which is complimented by “our own in-house software solutions”, which can monitor the firm’s key product area of structured products among other things. Lowes also uses to a more limited extent Intelliflo’s business management system.

IFA Bradbury Hamilton uses Intelliflo’s Intelligent Office, Voyant for cash flow modelling, O&M for pension switching, Micap for enterprise investment trusts and venture capital trusts, Comparator for fund comparison and Financial Express for fund information, to name a few.

Sheriar Bradbury, managing director at Bradbury Hamilton, comments that each system has its advantages and disadvantages.

He says intelliflo’s Intelligent Office is “essential” for creating tasks for clients when tracking business and creating policy summaries. However he believes a problem with this system is that clients have to be added manually and some valuations from providers cannot be transferred, meaning funds have to be added manually.

Mr Lowes adds: “If you are predominately dealing with mutual funds, collectives, life insurance, then [back office systems] have been built for you. But if you are giving holistic financial advice…there is still a long way to go for an individual system to be perfect.

“If I had a load of [structured products and investment trusts] and wanted to know how much exposure I had to one firm, I don’t have a system for that if I wanted to use one of the back office systems.”

Business value

While there is no doubt an investment of time is needed to migrate data onto a technology system and to configure it to individual business processes at outset, Ms Gilbey believes there can be significant monetary savings in the long-run.

After adopting Intelligent Office, Ms Gilbey claims that Grant Thornton saved £120,000 per annum by automating valuations and £70,000 in employment costs by automating income matching.

She also says that adviser firm Alexander House estimates it has saved £160,000 by being able to run their businesses in a ‘virtual’ way, with advisers and support staff linked by Intelligent Office, mitigating the need for office space.

It very much seems to be horses for courses. While there is agreement that these systems can certainly save time and money in the long-run, more than one system is often needed and that means complexity and an investment of time.