Your IndustryJun 21 2017

Getting your house in order

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Getting your house in order

Financial services are often accused of being behind the curve; for years many advisers rejected using a computer to support a client meeting on the grounds it would ‘get in the way’ of building the rapport needed.

Fact finding was a paper affair, with information keyed into back office systems to aid creation of the suitability letter; client details, products and investment choices then needed to be re-entered on paper forms and sent to providers. Creating client valuations was a tortuous event, ringing different investment/product providers for holdings information, knowing one valuation would be out of date when the last one arrived. When platforms arrived on the scene in the early 2000s, this presented a game changer for advisers.

From the get-go, advisers saved time and effort by having investments in one place, provision of regular valuation information and largely removing paper forms. The removal of paper has been one of the biggest benefits to advisory firms; electronic fee statements that are imported and reconciled automatically, electronic contract notes that save on mail handling and data loads of valuations.

Adviser back office systems have evolved from a simple customer relationship management (CRM) to bring wider benefits to firms. Batch processing of remuneration and contract enquiry data, embedding quote and apply services like The Exchange and AssureWeb, structured check points for the advice process and suitability letters have all improved the quality and efficiency of advice. However, integrations between back office systems (more accurately nowadays, client and adviser management systems) and platforms or product providers have not necessarily continued at the pace we might see in other industries.  

For the past few years, each ‘side’ has been finding its place in the value chain.

As platform technology matured, they positioned themselves as a one-stop-shop; broadening product sets, various planning tools and analytics, document stores and client portals (in some ways marginalising the traditional back office system to fee management, advice process compliance and practice management). The development of ever more tooling has not necessarily brought the benefits to adviser firms that platform and product providers expected nor the business volume that they hoped for. Platform CGT calculators can be useful, but they do not always have the book cost for the assets or ability to include gains/losses from assets held off-platform.

Asset allocation and portfolio analysers can be limited to reporting only on what the platform knows about – pulling in data from other sources is a challenge that has not really been addressed, more comfort in sharing information with advisers than competitors.

With the core functions around fee reconciliation, client record-keeping, compliance and practice management well matured in adviser software, the focus has, quite rightly, been in improvement on the provision of advice. Vendors such as Focus Solutions, Intelliflo and Iress are bringing planning tools to life, adapting to the features and opportunities presented by modern web browsers, tablet devices and co-browsing to share ‘what-if’ scenarios during a client meeting.  

They are launching robo offerings and are embracing software as a service, micro-services and integration points to better link into their tooling partners. Enterprise data aggregation services such as MoneyHub and Sammedia enable advisers to build a wider picture of client holdings much more quickly. These improvements and enhancements are all there to create a more collaborative and less time-intensive advice experience for both the adviser and the client.

Alongside these improvements to the advice journey, more providers are linking up to support transaction activity from advice solutions. The depth and fluidity of these integrations does vary; nearly all will support the contract enquiry and remuneration messaging. However, the lack of agreed open standards for new business or transactional instructions means this aspect can vary from the delivery of data into standard web screens to reduce re-keying to a more seamless straight-through processing, where the adviser does not leave their own system.

For an advisory firm, the benefits here are clear: better control over end-to-end process, reduced risk of error or incorrect instruction from re-keying and fewer systems to be trained out to advisers, paraplanners and administrators. While the benefits for providers are clear, enhancing the overall adviser experience, they do still have to create a bespoke integration for each advice solution, with each one carrying a maintenance and testing overhead.

Using an open standard, as is the case for transfers, this test burden is reduced, because the same messaging works for all market participants. Until that issue is addressed, the integration of advice solutions to providers is going to remain piecemeal and pick off ‘heavy lifting’ related to standard activities such as 'on-boarding' new business.

As the core of platform technology matures, we are seeing providers taking more control of their front ends. Where this was once seen as an adviser work bench to lay out platform functionality while slick web experiences were something for the direct-to-consumer world, we are now working with providers wanting to rework their solutions with focus on user experience and usability to streamline transactions and deliver meaningful information to advisers and investors.

One argument is that this move to online processing is centred on saving providers money, pushing more administrative effort out to customers and advisers.  In some ways this is true, but by doing this through well thought-out websites or integration into adviser software solutions, it gives advisers control over their client/provider relationships. It also gives surety of instructions received, work completed and action taken, which is lost when paper forms are used or STP is code for straight to printer.

Modern financial services are based entirely on data and information; with no physical product to deal with (unless your commodity options are not offloaded in time), one of the key differentiators for participants is the speed and accuracy with which they can deal with data and the ease with which transactions can be executed. Technological trends of application programming interface, micro-services and open standards for structured sharing of data, such as the EU's Payment Services Directive 2, are ones that providers need to work on to further streamline the interaction between their products, clients and adviser firms.

The ability of a provider to integrate with other parties in the financial services landscape is going to be essential as systems give way to 'componentised' services accessed on demand, wherever and whenever.

The work that software suppliers do over the next few years to create effective and engaging user interfaces will be essential in supporting the service that advisers offer to clients as the provision of advice becomes even more collaborative and discussion-led. The 'R' in CRM will be where value is realised, it is relationships that foster growth.

Chris McCullam is principal consultant at Altus Consulting

 

Key points

For years, many advisers rejected using a computer to support a client meeting.

As platform technology matured, they positioned themselves as a one-stop-shop.

Modern financial services are based entirely on data and information.