2015 is here, you probably noticed. Normally at the start of a new year, I’d do a bit on what we might expect to see, and I will do that, but first let’s do something a bit different.
All the technology in the world, from the clever gimcrackery in your Audi to your mobile phone to your CRM system to your platform has one common weak link: You. You are a big, inefficient, leaky sack of icky stuff. You take all that good, clever technology and break it. You can’t be trusted.
As an aside, we recently took delivery of a new Audi in my house. Not in the house – the car is about the same size as my house – but outside it. Within 10 minutes the Whale, as we’ve named it, had let us know in no uncertain terms that we were not using the vehicle in an optimal manner (you have to imagine that in a German accent) and that we should desist immediately, or maybe buy something Japanese.
So to kick off our thinking on tech in 2015, I want to talk a little bit about how you as advisers work with the companies that are providing you with online resources.
In doing this I’m particularly thinking about the new pension products which are being rushed to market to take advantage of Steve Webb’s new reforms. And we won’t talk about the selling your annuity proposal other than to blow raspberries at it.
Having talked to a number of development teams about what they’re up to, I’ve been struck by how fearful many firms are. They won’t admit this out loud of course, but the perception is that if they’re not ready to go with a new product in April then they will have missed the boat, won’t get any business ever again and won’t be allowed to go and have a crafty underage beer under the Dean Bridge with the Edinburgh cool kids any more.
As a result, and naming no names, I am seeing normal development cycles seriously compressed and a level of what we in the trade call ‘bodging’, which does not augur well.
Bright and shiny
If you’re building your new product on shiny platform-based, highly configurable technology then it’s not too bad. You can sketch out a new product shape in an afternoon, put in parameters to test it in a few days, and then it’s a few weeks’ effort to get it built plus all the testing, so a few months. Not hard.
If you’re using older systems, as most lifecos are, then the normal development cycle can be closer to a year for a full launch. Oftentimes launches are broken up into phases so that at least something can go to market, even if it’s half-built. Then, if the company keeps focus, it all clicks into place behind the scenes. If it doesn’t – well, I still recall one product class at a lifeco which will remain nameless, which never built the functionality to remove the AMC on loyalty bonus units on one of its big-selling pension products. ‘We’ll get round to it, it’s not an issue yet…’ is the mating call of harassed proposition developers everywhere.
Pension freedom and reform may not need new products; just bolt-ons to existing ones. The problem is, there’s no such thing as a simple bolt-on. I’ve written before in this column about something painful called ‘regression testing’ which means that everything you build affects everything else, like a sort of very dull chaos theory. So you build flexi-access drawdown, and suddenly you can’t access half the investments in the product, that sort of thing. That all needs to be tested, very carefully, and it takes time. You can’t rush it, and the more venerable your systems, the more care and time it takes.
I’m not suggesting that providers say they can’t offer new flexibility from when it’s allowed. That would be a disappointment for clients, and for you – but much of this can be done manually or via systems, in a way which is functional rather than pretty. So, not sexy, not a sales story, but good enough until the new stuff is really, really ready.
So why should advisers care about any of this? The answer is that the arms race to avoid getting a spanking for not being ready in April is not helping providers, not helping you and not helping clients. The interests of all three parties are aligned here. The more providers believe they have to rush, the more half-done stuff that will be delivered to you and your clients with a big spangly bow, and the more problems there will be.
I’ve already seen adviser selection criteria based on who will deliver the shiniest new stuff in April. That’s nuts. This is one of those times when we should be responsible users. Talk to your providers, be open and honest about what you will need, and ask real questions. Not ‘will you be able to handle pension freedoms?’ But ‘how will you do it in this or that situation?’ – and be ready to accept a range of answers. It is far better to have an interim solution which works, followed by a new product which works, than a new product which doesn’t work.
Providers – if advisers (and the industry) are restrained about baying for new kit, your side of the deal is to be really open and honest about how ready you are, how you’ll do it all and when the various elements of what you’re delivering will be in place.
This is not one of those times when the big reveal will work in your favour. It’s too important for that.
User initiative
OK. Jumping over to other types of systems, the way advisers interact with technology is often problematic. Some of this is down to how systems (especially back office systems) are sold, but some of it really is down to users. How many times have support teams at tech providers been phoned by irate users who have done the fintech equivalent of using the CD drawer of their computer as a cupholder?
Many. Too often purchasers assume something will work a certain way and if it doesn’t they move into the ‘SAUSAGE, EGG AND CHIPS’ mode of trying to do the same thing over and over again until the damn computer learns it. It won’t.
The system is perfect. It’s you who is imperfect.
Not really, and especially not in our sector. But one wish I have for 2015 – and beyond – is that when you as advisers select technology, be it a CRM, a decumulation product or a platform, you start from a position of knowing what it is you want and need, in detail.
Be enlightened purchasers. And take the long view – what appears to be shiny and new may be a whole lot less capable than the more functional example a little down the road. It’s easier to repaint than it is to tear down a house and build again because you got the foundations wrong.
And again, providers, my wish for you this year is that you will stop overselling, be clearer about what works and what doesn’t, when the new bits will be ready (be realistic) and help advisers understand why it’s inadvisable to rush to market. The race will be to the strong, not necessarily the swift.
Oh, and 2015 trends? Wearables, mostly.
Mark Polson is principal of platform and specialist consultancy the lang cat
