Technical advances

24 June 2010

Advisers will need significant technical capability post-RDR. A key requirement after 2012 will be the justification of advice and remuneration. Advisers will have to justify the fee that they are charging on an initial and ongoing basis. They will need to demonstrate what they have done for clients both upfront and the long-term service they provide. That means recording tasks and time spent on each client. They need technology to do this effectively.

Also, overall margins are decreasing. Estimates suggest that providing an ongoing A lot of distri-butors are only paying 0.5 per cent trail, so there is an obvious problem. Technology needs to help reduce serv-icing costs and help deliver an adviser’s propositionservice could cost around 1 per cent of assets under management. A lot of distri-butors are only paying 0.5 per cent trail, so there is an obvious problem. Technology needs to help reduce servicing costs and help deliver an adviser’s proposition.

A lot of distributors are only paying 0.5 per cent trail, so there is an obvious problem. Technology
needs to help reduce servicing costs and help deliver an adviser’s proposition

Technology can also help with providing a better service to clients, the presentation of information and change management. Technology can help advisers move to a new- style proposition and the execution of that proposition. It can do this through the creation of new-style workflows. This is crucial in the transition process. Advisers can look at different workflow models for different clients and this will provide the regul-atory justification for the different service models they prov-ide. Technology can also help with the delivery of advice.

Advisers need a technology that interfaces with product providers and platforms. This helps keep costs down, from the provision of service to audit trails to invoicing. You can do this within one system - our Intelligent Office system has that capability, for example.

There are now a number of platform providers out there and advisers will move to use one or more. Links from back- office providers to platforms are still work in progress but we are looking at the first stage of going live with a few players by the end of this year.

 

There are core systems that advisers need to get right. They need a good CRM system so that they can manage client data. They also need a financial planning system.

This allows advisers to manage client investments and will talk to a wrap. This will usually be one piece of software.

Then advisers will almost certainly need cashflow modelling software. I think this is essential for quality advice. This will sometimes be included in the financial planning system or can exist as a separate tool - neither is better, it is whatever works best for the individual adviser.
A platform is the other key We tend to deal with the higher-end advisers and we still find plenty of people who don’t have their technology sorted ahead of RDR. My impression is that it is still a huge issue for advisers

We tend to deal with the higherend advisers and we still find plenty of people who don’t have their technology sorted ahead of RDR. My impression is that it is still a huge issue for advisers

piece of technology that advisers will definitely need. The UK market is evolving differently to the Australian market but the platform is important for buying and selling funds. Many will contain tools such as asset allocation and risk modelling but good advisers don’t tend to use those tools. No one has yet built the perfect platform but there is a lot of competitive and innovation in this area.

The strength of adviser technology is one of the reasons why consolidation has not happened in the adviser market. Larger firms don’t make bigger margins. They don’t get the economies of scale that might be expected. The reason that small firms are so successful is that they have all this technology at their disposal. Ten years ago, advisers had to build it yourself. Now they can have a best-of-breed solution. However, if they are going to cherrypick technology solutions, the systems need to talk to each other but most wraps feed into First and other software.
We tend to deal with the higher-end advisers and we still find plenty of people who don’t have their technology sorted ahead of RDR. My impression is that it is still a huge issue for advisers.

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