For many years practice management systems were the most important piece of technology in an adviser business. Post-RDR, while there is now far more focus on the tools that enable advice delivery, practice management systems are still a core part of an adviser tech proposition, and generally provide the foundation on which other services can be built.
By far the dominant player in this sector is Intelliflo which is now generally accepted as having a 50 per cent market share, so they are the natural place to start. Like anyone with such a large market position, they have their detractors, who invariably shout loudly. Google, Apple and Microsoft all face similar problems.
Conversely, I frequently talk to many very happy customers and the continued growth of their market share shows there must be far more happy clients than there are unhappy ones. It is only fair to say Intelliflo have faced some significant challenges in the last few years, from my perspective they have addressed these well.
For example, the time taken for pages to render was an issue 18 months ago. Since the company re-platformed their technology to Amazon Web Services they now score exceptionally highly in this area. Apdex is a global standard in this area where a score of between 1.00 and 0.94 is considered excellent. Consistently this year Intelliflo have scored 0.95.
During this year, Intelliflo have advanced their data intelligence tools to provide more adviser dashboards. This includes two very exciting external technologies, the machine learning, powered Amazon QuickSight business intelligence engine and Snowflake, a cloud-based data platform that I'm hearing a lot of people I respect getting very excited about.
In addition, I’m told in the last couple of years Intelliflo have rewritten 8 million lines of code in the product. Some of their competitors suggest Intelliflo is "old technology" but to me this suggests a significant ongoing investment in continuously refreshing the platform. In recent weeks I have heard very good things from beta testers of their new financial forecast tool, a light version of Intelliflo Planning, which will be available accessible through their client portal next year.
Their big announcement in 2023 has been the “AdviceTech as a Platform” wealthlink partnership with SS&C, which I understand they are on time to deliver early next year. This will be a huge step forward for their users. The arrangement has significant nuances compared to earlier ATP propositions, which I mention below, but these are to facilitate the arrangement with SS&C as the platform operator and are not anything that should concern advisers.
In the past what most advisers really bought a practice management system for was the core accounting capabilities and that is where Intelliflo has been king for many years. It was the same feature that really drove the growth of the previous dominant practice management system, the now shuttered Adviser Office system originally grown by 1st Software. Looking to the future I see significant changes in the ways advice firms will construct their charges, and the technology they will need to change this coming over the next few years, and that is an issue any firm wanting to continue as a market leader should keep an eye on, but that is an issue for another day.
This year Iress finally closed the old Adviser Office system and rationalised their practice management proposition to offer three distinct options to their customers in this area. For many small firms Xplan Essentials, an out of the box solution which also bundles the O&M cashflow planning tools and a client portal, may fit their needs. For medium size firms Xplan Plus includes everything in essentials, but with the ability to customise workflows reports and client facing documents using expand data for the largest firms Xplan One.
Before continuing to look at the rest of the practice management market it is important to recognise how much the landscape has changed in recent years. Many of the most significant players five years ago are now channelling their efforts elsewhere, or focusing on different parts of their business.
For example, True Potential, who have long offered one of the most comprehensive practice management solutions in the market, are now primarily focused on growing their wealth management practice. To be fair, they do continue to offer the support services and technology proposition to a significant number of external advisers but this is a relatively modest part of their income stream.
If you are happy to put business onto the True Potential platform which, to be fair, was the first ATP proposition long before Intelliflo made their much heralded moves, the solution is comprehensively integrated. This is a very clear demonstration of the huge benefits that the ATP approach can have over traditional platforms from both an adviser and client perspective.
Benchmark Capital are another long-standing advicetech as a platform proposition. The in-house platform is deeply recruiting advisers who want to take their end-to-end proposition as the whole package to save the adviser from worrying about choosing their software and helping them to increase the amount of time they can spend on advising. I have seen a couple of impressive case studies from Benchmark where they have been able to move single practitioner advisers from £250,000 turnover to £1mn with virtually no extra staff and a massive increase in net profit. When the numbers are like this, it's understandable why they have moved away from being a pure technology play.
Those platforms who are convincing themselves that the Intelliflo ATP model will not work need to take a long hard look at the success of both True Potential and Benchmark over the last few years.
The reality is that, post-RDR, practice management systems and the other advicetech firms use deliver far more value, for far less cost, to advisers and their clients than platforms do. The overwhelming majority of platforms have never really understood adviser technology and perhaps the biggest lie the platform market has told over the past 20 years is that platforms can replace practice management. The latter deliver a vast array of additional functions a platform will never deliver unless they have built a practice management service with a platform built in as Benchmark and True Potential have demonstrated.
Plum Software was bought several years ago by Praemium and transferred to Morningstar at the beginning of last year as part of the acquisition of the non-Australian Praemium assets. Plum has now been fully replaced by Wealthcraft, of which more later.
Historically, SSP Worldwide was also a significant player in the practice management market, having supported such key players as SJP and Royal Bank of Scotland. In recent years, the company appears to have been far more focused on the general insurance market which, to be fair, is where the company originated from. The business was bought by Constellation Software in Canada as part of their Volaris Group, who buy to hold software companies and make them successful. Given SSP is one of the largest of the 15 companies in that group, I’m surprised not much has been seen from them.
Focus Solutions have specialised in producing highly innovative software for some of the largest adviser firms like Skipton Building Society, NFU Mutual, and Santander. They have spent the past few years on a major investment in their system including a move to the cloud and modularising their services. Much of their transformation will be made available to a far wider sector of the adviser market than in the coming year so I am putting them firmly in the “watch this space” list for 2024.
In the past couple of years two systems that have originated in the mortgage market are now making a big push into the wealth market. 360DotNet have grown a significant position in the mortgage practice management market over the past decade and have always had aspirations in the wealth market. Their recent capital raise, including a significant increase in the percentage of the business owned by Quilter, is an important key indicator of a positive future.
Also Twenty7Tec, who over the last few years have established a very strong position in the mortgage sourcing market, last year acquired Bluecoat Software and their Finplan system in addition to the Meet Parker Digital and AI platform, which has been relabelled Communicate, and the Broker Sense affordability platform they bought last year.
The key point here is each of these businesses are successful in the mortgage market and are therefore well placed to grow solutions in the wealth market. The reality of advice technology is that I have never seen anyone build a system that from day one treats the needs of wealth and mortgage practice management/CRM equally. To be fair this is hardly surprising. One firm I know who recently completed building the complete entry and wealth journey in the US estimate it’s taken them seven years. If you are buying core technology for your business, it is really important to understand the financial strength of the supplier. It’s great to see new players entering, but do they have the financial resources to see it through?
In terms of a dedicated wealth advice solution Plannr are, if you like, the pushy new kid on the block. Founded by Gareth Thompson, who has for many years run Code Potato, a highly respected web development service that has provided adviser websites and a range of other products for financial advisers, they are aiming to be the new all singing, all dancing option for practice management and CRM solution advisers.
Until recently there were reasonable questions asked over Plannr’s financial resources, but Fintel buying 25 per cent of the business not only addresses that issue but also brings to the business a strong audience to sell into, ie the many thousands of SimplyBiz members. Their major challenge is that it takes a long time to build a comprehensive solution although I am hearing suggestions that they are nearly there.
When exploring systems in this area. It is important to recognise the difference between practice management systems, which are generally built around the specific needs of adviser practices, and customer relationship management systems which tend generally to be broader systems that can be used in any industry to support client relationships and interactions.
Typically, generic CRMs will be far more focused on activity like marketing, lead generation, prospect management, client on boarding, and multi-channel communications. The largest systems of this type, notably Salesforce and what was Microsoft Dynamics, now generally being referred to as the Power Platform, have development budgets that run to tens of billions per year, but they need to be customised, usually by business partners to provide industry specific functions.
In 2016 Salesforce launched Financial Services Cloud, which was their first ever system targeted at a specific vertical market. Notably this has been embraced by SJP as a core part of their substantial recent technology upgrade.
Several specialist integration partners have built practice management solutions on the Salesforce platform. Particularly worthy of mention, are Fluido Financial Services. Their team is led by former Standard Life alumni Duncan Muir, the company ultimately owned by Infosys and as a major Salesforce partner can offer the technology at very attractive pricing.
Additionally, US-based XLR8, another Saleforce-based dedicated financial advice solution with a small but significant number of UK customers. Wealthbox is another American player that is regularly used by UK advisers, but it is not based on Salesforce.
Zoho is again a broad-based CRM solution picking up UK adviser customers while not explicitly adapted for the financial advice sector. This is due, at least in part, to the efforts of Eileen Murphy of adviser CRM deployment specialists Informed Training. If you are going for one of the US tools that may mean that you will not get the level of integration with other UK advice tech providers, but some firms prefer the more specialist CRM functionality, especially in areas like protection where there are not really any dedicated practice management systems. That said both XLR8 and Wealthbox have an impressive range of third-party integrations into other specialist advicetech in the US so, if they get sufficient traction in the UK, I would expect them to follow a similar path.
When it comes to Microsoft Dynamics the two most active software suppliers embracing this platform are Morningstar and Time4Advice. I should also mention Openwork are using Dynamics to build their Concert Hub.
For many years, Morningstar have been an advicetech powerhouse in the US where no fewer than two thirds of all advisers used their portfolio research software. In the UK, by comparison their offering has been limited and had an equally limited market share. There are major signs that this is changing.
Over the past few years Morningstar have made some notable software acquisitions outside the US, particularly the non-Australian assets of the Praemium business which include the Wealthcraft, Microsoft Dynamics/Power Platform based CRM proposition and their own investment platform, plus Finametrica, one of the most popular risk profiling engines with UK advisers, the Sustainalytics ESG risk rating tool, and Adviser Logic a financial planning tool originally from Australia. The company is now building an international division dedicated to supporting advisers outside the US and particularly in the UK, Australia and South Africa.
With their outstanding credentials, and having assimilated such impressive third-party solutions, Morningstar appear to have all the right assets to become a major player in the UK market over the next few years. So far, I have not yet had the chance to do as deep a dive as I would like into Wealthcraft, but the potential is clearly enormous.
Time4Advice, who were bought by Transact in 2021, are mid-way through their transformation to the Power Platform. When they were bought there was expected to be some very deep integration into Transact; it was my understanding that this would also be used as learning by Transact for integrating to other platforms. This has not moved forward as far as I might have expected. Time4Advice concede that they have had some deployment issues around new clients in recent years.
That said I do hear people I respect and know to be hard to please saying very positive things about the business. They also have a good community of consolidators working with them which I see as a key indicator of potential growth over the next few years, indeed software suppliers without such a constituency are likely to lose market share as more and more firms get bought out. Overall, it is probably hard to judge their full potential until such time as the full Power Platform migration has been completed.
Any system based around Microsoft Power Platform has the potential to easily integrate a wide range of generic third-party tools, and of course the prospect in the near future of the Microsoft CoPilot AI service which is due to roll out in the near future.
It is important to recognise that for the smallest firms in wealth advice, the number of options is quite limited as most advice tech suppliers are now seeking a minimum of five, if not 10, licenses. Of the firms listed above Intelliflo, Iress, 360DotNet, Twenty7Tec and Plannr are exceptions to this.
Other technology providers in this area who currently have a much smaller share of the UK market but who you might want to include in a comprehensive assessment include AdviserCloud, Adviser Objects, Aixigo, Assyst Software Avaloq, Centology, Durell, Elen, GBST Advice Intelligence & Wealth Connect, JCS, Hourglass, Prestwood, Plan Happy and Wealth Data Systems. Some of the above have limited elements of practice management or a broader range of other services which I will explore further in later articles in this series.
Ian McKenna is the founder of AdviserSoftware.com where further information can be found on the detailed functionality of these systems.
