Technology  

An investment in technology is necessary to engage emerging savers

Ian McKenna

Ian McKenna

I can see reasons for and against each option. By independent technology suppliers extending their capability there will obviously be deeper integration from outset with the adviser’s existing technology proposition.

Indeed, in the case of those supplying their financial planning tools and portfolio management capabilities many of the processes necessary to build a simple automated advice tool will already exist in-house. 

On the other hand, platforms will have greater expertise when it comes to conduct of business rules, trading and best execution responsibilities. 

It is only fair to recognise that True Potential have been delivering their impulse save tool, an ideal vehicle to offer young consumers as part of their proposition, for many years. But the company is vertically integrated between the practice management and platform capabilities. 

Platform tools

If the online tools are built via platforms it may be easier to stick to any model portfolios that the advice business uses for other clients. 

One important issue to consider if platforms wish to build their own tools to support advisers’ younger clients is to ensure such tools have the capability to use whatever the risk-profiling tool of choice is within the company.

Using more than one risk-profiling tool within an advice practice will cause difficulties and inconsistencies in the future if the adviser needs to move a client from one to another. Historically platforms have not been good at building technology that could work well within advice companies. There are many important lessons for them to learn. 

That said, it has long been my belief that third and fourth generation platforms will increasingly add value by delivering additional technology capability, at a fair commercial cost, rather than free to their advice partners. I am seeing a few enlightened organisations already moving in this direction. 

It will not only be younger customers who can benefit from such technology. There is a growing belief that consumers across all generations are widely embracing digital communications, but to attract the next generation of savers, outstanding technology will be essential. 

Ian McKenna is founder of FTRC and AdviserSoftware.com