PlatformsOct 23 2018

Mark Polson: Four ways advisers can improve their tech experience

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Mark Polson: Four ways advisers can improve their tech experience

I am writing this on an aeroplane, and I can’t help but notice that the guy next to me is writing his own article, which appears to be called ‘Religious rhythms and flexible capitalism’. I’m thinking of offering him a swap, as his sounds much more fun than a column on financial technology. But he looks a bit serious, so I probably won’t.

And in a way that’s a bit of a shame. If we had WiFi on board this aircraft, and if I could do a demo for this guy (who, let the record show, is eating both his free biscuits at once in a sort of biscuit stack or biscuit club sandwich formation, which is wrong on every conceivable level) on the varied bits of software and technology that adviser firms are asked to navigate every day, I reckon he would have a newfound respect for the advice profession.

The topic I want to write about this month is one that was suggested to me by a salesperson from a well-known and much-loved investment platform. The topic is ‘obsolescence’, and now I’ve looked it up I find it’s to do with the natural shelf life of a product or service before it becomes obsolete, and not what happens to me when I ignore the medical profession and order a steak instead of a salad.

Advisers reading this may deride salespeople from providers, but good ones meet dozens if not hundreds of companies every year and develop a great sense for what’s a genuine issue in firms and what isn’t.

Our man in this instance was talking about what advisers were looking for when discussing potential usage of his platform. His take was that for the first time, one of the highest priority requirements advisers he was visiting had was that they should be able to clearly identify the emergency exits and be confident that lighting would guide them to those exits at floor level.

To put it another way, advisers have been so badly bitten by recent high-profile problems at platforms – we all know which ones – that they now enter into potential strategic business partnerships, not with a clear heart but as they might take on a lease for an office, with the break point in mind.

I think this is important, and kind of sad. Companies are now so jaded by their experiences – and not just from platforms, as we’ll come on to in a minute – that they are almost calling the game a bogey before they start. That’s a world away from a prudent ‘never go into a room you don’t know how to get out of’ approach.

Hearing about habits

At the Lang Cat we’ve been doing some research recently into adviser technology attitude and usage. Platforms are part of that, but not a big part – it’s more about other software and the day-to-day life of financial planning practices in the back office. 

What’s important is a quote from one guy we talked to (sorry, it’s all guys in this piece) about having changed his back-office system. Here’s what he said: “I’d rather go out of business than go through that again.” Before anyone starts second-guessing, this was completely genuine. The poor sod was traumatised. 

Chart 1 shows how our research, which we conducted on behalf of a private equity firm that was interested in investing in technology companies that support advisers, played out. We heard from just under 100 firms as part of this exercise, and conducted in-depth interviews with 14 of those. 

In terms of how important various bits of software are to companies, back offices are the clear winner. We expected that, but we were interested to see how far down the pecking order risk profiling comes. Platforms were sixth: it’s clear to us where the centre of gravity for companies is. It’s common for even small firms to have up to 10 technology arrangements. 

Consider a made-up company that looks like this:

  • General business/productivity: Office 365.
  • Back office/customer relationship management: Intelligent Office.
  • Cash flow modelling: Cashcalc.
  • Investment research: FE Analytics.
  • Risk profiling: Finametrica/PlanPlus.
  • Platform one: Nucleus.
  • Platform two: Parmenion.
  • Document storage: Dropbox.
  • Bulk mail: Mailchimp.
  • Website: Wordpress.

And that’s not even a complex one. So how can companies improve their experience with technology, from the initial purchase decision through to daily usage? And what can anyone do to make the process of transition less painful when you do choose to move? 

Here’s the Lang Cat’s top four tips for tech mastery – most people would do five, but we’re into disrupting the status quo:

1. ‘Gnothi Seauton’

The oracle at Delphi didn’t know she was talking about adviser technology when she proclaimed “know thyself”. It’s true, the best way to get the most from any piece of kit you are going to spend time or money on is to understand the use you have for it. 

You need to know how you’re going to use something before you buy it, so don’t buy a system until you have worked out how it’s going to fit into your life – and by ‘your’ I may well be referring to your admin staff if you have those. This is rule one for anything you bring in – platforms being an absolute classic.

2. RTFC

A spin on the old exam technique of ‘read the effing question’, this stands for ‘read the effing contract’. We have become so inured to lengthy terms of service from Apple, Kindle, Google and others that we would probably sign away our first-born if it meant we could get through the onboarding procedure quicker.

If you have a legal adviser, get her to give your contracts the once-over. There are things that lie beneath that might matter to you in time. This is the part where you never go into a room you don’t know how to get out of. Jason Bourne is your role model here. 

3. Don’t underestimate transition

This is a key one, and it’s particularly important if you are doing what our man above was doing and changing your back-office system. Transitioning from one system of fundamental importance to your practice to another is like nothing else you’ve done before. It takes an intimate knowledge of the thing you’re moving from and the thing you’re moving to. It requires serious project management skills, and it requires sponsorship from the most senior levels of your business – big or small – to ensure that everyone is clear an orderly transition is job one, two and three for the business during the project.

In the nicest possible way, it is my observation that financial planning businesses are amazing at giving advice and creating plans. But the conducting of large IT migration programmes? Not so much. This is one area where either freeing up a really organised member of staff from their day job, or bringing in some external project management help, will make a world of difference.

4. Engage with the detail

Sort of related to point two, this is about looking beyond the brochure or what the well-turned-out business development person sold you on. I know a number of companies that have changed back-office systems from one of the two biggest out there to the other. 

The things that got them to change were, frankly, ephemera. The new system looked more modern, was more open, felt more user-friendly, and so on. But underneath, the leading back-office systems are incredibly similar. Not because they want to be, but because if you’re pulling in data from 60 or so different sources in predetermined formats, there is only so much you can do. If you have to deal with legacy protection and mortgage business, there is only so much you can do. And so on.

As a result, once the shock/pleasure of the new system has passed, companies are asking themselves why they went through that pain. Things are probably better, but by a far smaller margin than they imagined. That’s because the stuff that matters isn’t cool, or user-centric, or any of those things. It’s about data structures, and the boring stuff that no one wants to engage with.

When you keep that word obsolescence in your mind, and think about what the life of any system you decide to use is, your perspective can change dramatically. It’s all about buying in services as a business with the emotion taken out of it, and a cold eye on what may need to be done in future.

A summary? Own your technology stack – or it will own you. And, for the love of all that’s holy, don’t make weird biscuity sandwich stacks on your flight.

Mark Polson is principal of the Lang Cat