A typical advice firm could see its efficiency doubled if the systems it uses were properly integrated, research has shown.
A paper published today (September 24) by Origo in association with the Lang Cat mapped processes within 10 advice firms and surveyed 100 more online.
It concluded that admin employees could be 100 per cent more efficient if technology such as back office, document storage, platforms, investment research, financial planning tools and others were integrated.
Considering there is roughly one support member of staff to every £10m of assets under administration, these workers would be able to deal with £10m more, the research stated.
The study concluded that firms were typically using five standalone systems in the process of giving advice, building portfolios and managing clients.
This number rose to seven when platforms were added, and to 10 with the addition of more general systems like accounting and office software.
In a typical new client journey, client details were keyed in at least three times, with firms spending up to three hours per client on this process.
An advice firm that uses one platform typically requires 18 point-to-point integrations, a number that rises to 23 if two platforms are used.
According to Anthony Rafferty, managing director at Origo, this “disconnect is a very real and significant issue for advice firms, draining their resources on a daily basis”.
He said: “Our research shows that currently, despite sterling work by some of the players in the market, advice firms do not benefit from a level of integration that is of real use to them.
“Integrations are typically point-to-point, with one provider integrating with another, for example for valuations.
“They are also driven by business case, with platforms, customer relationship management and other system providers naturally prioritising integrations that will bring in higher levels of returns.”
Mr Rafferty noted it was a worrying trend that due to a lack of consistent and quality integrations, advice firms distrusted the data the systems were delivering, and ended up reverting to “inefficient, costly and potentially risk inducing manual processes, but over which they have more control”.
Mark Polson, director at the Lang Cat, said he was struck by the impact of the inefficiencies on adviser back offices.
He said: “Even where integrations do exist, firms aren’t trusting them or using them – with good reason in some cases.”
The research showed that 85 per cent of firms agreed or strongly agreed that lack of integration was causing serious inefficiency in their business.
Mr Polson noted: “Every firm is different. But we think in many cases each administrator could cope with perhaps twice as much asset under advice as they do now, if rekeying were eliminated and the production of client review packs in particular was radically streamlined.
“There won’t be one answer for how to address this, and we love seeing system providers working on integrations in all their forms.
“But we do need to get on with it: clients would be horrified to see just how much inefficiency there is. Providers are generally responsive to customer demand: we think better, deeper and more reliable integrations should be at the top of every adviser’s wish list.”
Nathan Fryer, paraplanner and director of Plan Works, said: "I whole heartedly agree with this research.
"More often than not information is keyed into a back office system, then to independent analysis systems such as FE Analytics, SelectaPension and whatever cash flow tool you choose to use.
"Then the outcome of that research is keyed into a provider's system and then some of the information is used to produce a suitability report.
"It is draining on resources and hugely inefficient."
maria.espadinha@ft.com
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