The price of advice is being weighed down by “dead wood” in the supply chain, according to the chief executive of boutique wealth manager Investment Quorum.
Petronella West told listeners on a call hosted by the Lang Cat this week (December 8) that although it can be “frightening” for smaller firms to cut down on the providers they use, there was a monetary benefit in doing so.
“I think there's a fair price [of advice],” said West. “[But] I think there's probably a lot of dead wood that is expensive, that has to be paid for. There's a lot of profit margins that need to be met."
She continued: “I remember reading the Professor Kay review  on the ownership of UK equities that the government did and he was very scathing about platforms.
“He talked about all the little bits that everybody takes along the way in order to make everything happen. And you need to streamline them, so that - whether it's trading or presenting or custody or advice or cash flow - it works in a way that's as efficiently optimised as possible, which is where I think technology will come in.”
West acknowledged the reluctance some firms may have towards taking charge of support services themselves.
“It's frightening to just say ‘I’m not using any of the financial services out there, I'm going to build my own thing’. And we're a tiny company.
“But there are people in the world who can do it for you, and they’re unfettered. [...] Technology has been a game changer.”
Resisting the software ‘rut’
One issue Investment Quorum identified in its own advice was its clients’ reports, and the fact 80 per cent of them didn’t like the format the firm sent them in.
After telling data management software providers such as Intelliflo “I want data the way I want it”, West said they simply replied ‘you can’t’.
She was then promised her firm would be able to pull down the data from the cloud, but this never happened.
In the end, her firm took inspiration from a San Francisco-based operating system called Notion and built its own system.
“We built it in the way that we own the data. So as advisers, we own the client data, not a third party, not anybody else. We own it,” West explained.
“And then we can digest and dissect the data, particularly with suitability and Prod and all that stuff coming on, and build our own [reports].”
Whilst West admitted the process has taken some time, the ability to plug in new softwares via an application programme interface to her firm’s own app meant it doesn’t need to rely on an end-to-end solution which it has no control over.