Something a bit different this month. I know you think the life of a Money Management columnist is all yachts and parties and stuff, but we do other things, too.
This month I’ve been thinking about what little changes we could make that would make a big difference to the sector. And the one I keep coming back to is process.
Let me explain, if you haven’t already clicked away/turned the page. In the same way as the key to alleviating poverty in remote areas isn’t so much direct aid as creating really good roads and infrastructure, the key to getting our industry working much more smoothly is process.
And while financial planners and advisers have admirable traits in many areas, process design isn’t necessarily one of them. That’s fine – clients need you to be great advisers, not business process workhorses. The problem is that the people in the big companies who can afford to hire the Six Sigma process guys also don’t seem to be that good at it. This is both a shame and really silly, because processes are really, really important in our industry. Being better at them would save thousands of firms and millions of clients a lot of hassle and stress.
Transfer trials
Take platform transfer processes, for example. (Don’t worry, this will turn into a technology column shortly.)
We talked to 95 firms for some recent research and asked them to describe the process of transferring between platform providers. Almost one in four said it was either “a huge undertaking” or “absolutely brutal”. More than half the firms said their experience varied significantly, but not one said it was easy. The median time our respondents said it took them was around 20 hours per case, and almost no one suggested it was less than 10 hours.
Easy might be setting the bar high. But I don’t think it should need to take 20 or even 10 hours to transfer a client – in fact, I reckon it can be done in three hours. I’ll come back to that in a minute, and explain why. It has to do with process, and control, and when we get to the tech bit I’ll suggest some things you can use to help with that.
Identifying the problem
First, let’s take a couple of steps back. We know that the idea of recommending transfers between platforms can make advisers as twitchy as a squirrel after downing five cans of Rage Inferno Energy Drink. There’s all sorts of generally valid reasons for this, but they tend to fall into two broad categories.
The first is suitability. In particular, reviewing a recommendation to see if anything more suitable for the client has become available. We reckon the rules are pretty clear on this.
Take COBS 9A.2.19 EU, for example. I know you can recite this in your sleep, word for word, but here’s what it says anyway: “Investment firms shall have, and be able to demonstrate, adequate policies and procedures in place to ensure they understand the nature, features, including costs and risks of investment services and financial instruments selected for their clients, and that they assess, while taking into account cost and complexity, whether equivalent investment services or financial instruments can meet their client’s profile.”
In other words, cost matters. The nature of the product matters; and the task of checking whether equivalent products can meet the client’s needs is an ongoing process.
Which takes us with all the grace of a Labour party Brexit policy manoeuvre to our second category: practicality. While firms generally have no problem with individual transfers, far fewer feel confident in bulk exercises, and many won’t recommend transfers even where they would like to, according to our research.
So we have a market where the regulations are clear on advisers’ responsibilities for ensuring what the Financial Conduct Authority considers “value for money” for clients, yet the practical implications of transferring are so onerous that many firms simply can’t make the case for it. When you think about the suitability rules in particular, this is unacceptable.
Yet, with the right processes and preparation, companies can largely overcome the expensive practicality problem and make sure they don’t run into an even more expensive suitability problem.
Project picks
I’m 700 words in and haven’t done technology yet – time to sort that out. The tech I want to look at this month is project management software – freely available to companies like yours – that can make processes a lot more manageable.
I’ll mention three here, all of which are either free or very low cost and offer firms visual ways of setting out their various project steps and to-dos. They’ve all got their pros and cons, and some might be more suitable for you than others. I think, used right, the emerging world of project management tech out there can unlock the secret to low-hassle, low-resource, high-suitability transfer processes.
I should mention I have no commercial interest in any of the companies I’m about to mention; I just think they’re great.
My first pick is Pipedrive, a customer-relationship management system designed to help small sales teams manage intricate or lengthy sales processes. From a platform transfer perspective, its value lies in the visibility of a process in which each stage can be named, progress tracked, and the relevant parties can see what’s being done. What started life as a lead generation/tracking system is maybe an awesome transfer process tracking tool.
Why not? You name the steps, you identify the clients, and then your admins move the client through as appropriate. You get great, simple, visual management information, which tells you how many clients are at what stage and how long it’s all taking. Pipedrive has a free trial and then the classic three-tier pricing model. You either want Silver at £12.50 a month or Gold at twice that.
Trello is another tool that can help simplify transfer processes. This is a task management tool based on the famous Kanban board project management approach. It provides a visual overview of the different tasks being worked on in a project and who is working on them. The board starts with a general list of information about the project, such as the objectives and individual responsibilities, each presented in cards, with further lists covering different aspects of the workflow. Tasks are placed on each card and the relevant individuals are added to the card, which moves through the workflow as progress is made towards completion.
You don’t need to be a genius to see how this could help with ensuring every client goes through a well-mapped process. Whole IT development projects are run with Trello – it’s a really powerful tool. It’s got a great free-forever tier (priced for advisers) and a premium tier at $10 (£7.80) per month per user that would do all any reasonable company would need.
Perhaps the best known tool for helping with project management is Basecamp. This feels like it’s used everywhere, which is testament to its effectiveness in managing processes and projects. My company runs on Basecamp. Like the others, its beauty is largely in its simplicity in making it easy to view what needs to be done, what’s being done, who’s doing it and what the current status is.
Basecamp is $99 per month for your whole business, no matter how many people use it.
The fundamentals
So those are my tips. Using cool tech might sound trivial in the context of a big transfer exercise, but the oversight, simplification of process and the visibility they offer can be a genuine differentiator and, used right, could unlock a huge amount of value and risk reduction at a business level.
None of these tools will tell you what the process needs to be. The good news is that you know this already. You know what goes into a suitability letter – and it might be less than you think. You know how often you have to phone the client – not visit them – for a platform switch, and you know what’s involved in chasing down providers. The trick is to set it all down in a logical process flow and then follow the living daylights out of it, over and over again, till you get good at it.
It’s not acceptable to leave everything as it is just because it’s too hard to change.
Platform transfers aren’t easy, but they don’t have to be horrific – you can’t change the requirements, but you can change your processes.
Good project management is fundamental to this, and usable tech is becoming increasingly fundamental to good project management.
Mark Polson is principal at the Lang Cat