All good things come in threes

Nick Eatock, executive chairman at Intelliflo, said functionality, security and service are the three vital factors that can make an IFA firm’s back office function either sink or soar. 

He is clearly a man in the know, as Intelliflo, which provides online software solutions to advisers, supports 1,850 firms and boasts 16,700 users. 

He says: “Broad functionality allows for day-to-day processes and administration to be streamlined, allowing more client-facing ‘billable’ time. Automation delivers significant cost savings; for example, client valuations and commission fee-matching. A ‘white-labelled’ end client portal is also a vital component of any system in this digital age.”

He adds that as part of functionality, it is worth having a streamlined processing system where advisers can work without the need to re-key client information. This is a major time-saver and reduces the risk of human error. 

He adds: “A ‘best of breed’ approach to linking the tools that advisers want to use, together with open Application Programming Interface capability, gives firms maximum flexibility.”

The onset of technology has clearly transformed the way in which IFA firms work. Gone are the days when sending mailing lists was a laborious task, with advisers painstakingly photocopying a pre-typed batch of addresses onto labels and sticking them onto the front of the envelope before posting them. Thankfully, all that has now been replaced owing to the rise of databases, platforms and software, which allows IFAs to ping an endless amount of clients with a simple click of a button.

But technology has also posed many challenges with regards to data safety. And this is why the need for security is seen as the second major factor that advisers must consider when selecting a back office system. 

Mr Eatock says the need for tight security is why Intelliflo prides itself on being awarded the British Standard Institute’s ISO 27001 certification. This is an audited process that confirms the organisation adheres to information security best practice and delivers the highest standard of data security to its clients. 

He adds: “Security has always been important, but with a digital system it’s vital you have a provider that operates to the highest standards. 

“The FCA, in its guidance for firms outsourcing to the ‘cloud’ and other third-party IT services, recommends the external assurance of the ISO 27000 series of certification is taken into consideration when conducting due diligence on potential third-party digital providers. It also covers areas of data protection that will come into force via the new General Data Protection Regulation being introduced in May 2018, which will increase the obligations of all financial advisers.” 

Last but not least, service is a vital process that advisers are being urged to take into account. 

It is important that IFAs consider what support they will receive from the provider in terms of migrating data, set-up, training, troubleshooting and adaptability. Mr Eatock says that although Intelliflo’s system is automated, it has to invest in knowledgeable people who can listen, respond and take action when advisers need it.

Service, or the lack of it, is the reason why Robin Wood, IFA  and ethical specialist at Swansea-based Park House Financial Services, says he prefers not to use a back office system. He adds that although his network uses Intelligent Office, he finds it "clunky and lacking any benefit". He says: “You get less out of it than you put in – like a bad Masterchef meal.

“The three factors I would need in a system are firstly, secure access for me and colleagues, but not others. Secondly, integration so I can input information once for all providers; and thirdly, time-saving benefits, otherwise the juice is not worth the squeeze.

“I have yet to find a system that does all of this, so I am saving my time and money, keeping costs down and allowing more research time and client contact.”

Despite this, there is no doubt that there are many advantages to having a back office system. This includes 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.

This is echoed by Phil Young, managing director for Manchester-based threesixty services, who highlights the need of a good back office system.

He says: “Unless you’re making so much money that you don’t need to think about it, it’s pretty much impossible to control and influence most of your key business metrics without a back office of some sort. It should track and monitor revenue, activity and costs at a company and client level, allowing you to see where adjustments need to be made. Most firms, I suspect, use a back office for tracking revenue received and some activity, but don’t really record enough information on costs to calculate detailed profit per client.”

However, he recognises that not everything is smooth sailing and that some cons do pop up along the way when using a back office system. He says technology businesses are often focused on the next big contract and constant development can mean a system becomes difficult to manage. 

He adds: “The user experience often reflects this and there’s arguably too much of a training overhead for new staff. I’m often told by advisers that they only use 20 per cent of the capability, like that’s a fault in them. 

“Realistically, a back office will probably end up with more functionality than you’ll need. The art is in working out which 20 per cent you really need and will get the best return from. Technology salespeople often focus on whizzy tools that look good in demos but don’t provide as much benefit as a boring piece of functionality, which reconciles bank statements well.”

That is why he believes IFA firms must weigh up whether the outputs they need to run their business matches what a new back office system delivers in speed and reliability. 

He also adds that advisers should also remember to consider whether the technology used is going to receive ongoing investment funded from its own profits, so that IFAs  benefit from this in the future without paying extra, and whether they are able to exit relatively easily if they decide to change supplier.

Aamina Zafar is a freelance journalist

Key points

There are three factors advisers should consider when selecting a back office system.

Lack of service is the reason why one IFA prefers not to use a back office system.

IFA firms must weigh up whether the outputs they need matches what a new back office system delivers.