System selection

24 September 2009 0:00 am

Get this decision right and advisers can automate many time-consuming and profit-eroding practices, leaving them free to increase the amount of time they can spend with clients, which can dramatically increase income.

On the other hand, choose the wrong system and you are likely to spend much of your time in a continual paper chase or struggling with an unfriendly system that is ill suited to your business needs.

Given the dramatic effect that such a decision can have on the bottom line, I never cease to be amazed at the way that many advisers select software.

If anyone suggested to an IFA that the right way to select a pension provider would be to make an appointment with a handful of pension providers, each only offering their own product, invite them each to pitch their best features, perhaps talk to a few people who have pensions with the same companies and then select a provider, primarily on price and which meetings gave them the greater comfort, then most advisers would be chafing at the bit to point out why such a process was the wrong approach. Yet this is a fair representation of how most IFAs choose their software providers.

The process for selecting a software supplier should be very similar to that for identifying a financial product.

First, you need to understand what the objectives are that need to be met. In practice, an adviser business is really your most important client. If you do not look after the business properly, how can you possibly look after clients?

To understand exactly what your technology requirements are going to be, it is essential to pull together a clear understanding of what you expect your customer proposition to be, the services you are expecting to provide to clients and then to map each of the activities that will be necessary to undertake to deliver such services.

From this point, I would then look at the manual activity necessary to obtain the information by traditional methods, fax, phone calls and post and then consider if the process might be automated.

A similar exercise is, I believe, necessary for all internal business functions, compliance processes, etc. This should identify where your business is incurring unacceptable and avoidable levels of cost.

I have had some interesting conversations recently with a number of adviser firms which are reviewing their current software suppliers.

A number of organisations which have tried to create a structured approach to selecting system suppliers have found the software companies reluctant to respond to formal questionnaires seeking to identify the ability to meet specific requirements.

There is no doubt that producing a detailed requirements' document and asking potential suppliers to formally respond to it is the right way to approach this subject. If a supplier does not want to respond in that way, move on to the next one.

It is important to detail fully all you want to ask of a software supplier. At the moment, our research team is in the process of constructing such a document.

This already extends to over 20 sections covering product support, training, prospecting, financial planning tools (including affordability tools), risk profiling, portfolio modelling, asset allocation, calculators, comparison tools and mortgage tools, fact-find, e-new business, compliance, remuneration and charges, client reports and suitability letters, client servicing, diary management and workflow, client segmentation, third-party integration and data migration.

Our questionnaire is already approaching 600 questions before we add questions on data security, client-facing websites and financial strengths.

We are considering creating a rating system for client management systems similar to the e-Excellence benchmarks we create based on product providers' e-commerce and I would be interested to learn from readers if they believe such ratings would be of help to the market.

All too often, I find I am coming across situations where the primary driver in the decision on which system to buy is cost where it should surely be, how well does the system fit the adviser's business and how much cost can it remove?

Opting for the cheapest option when it comes to software will almost certainly always be the wrong decision.

By identifying the system that best matches the operating model that an adviser wants to operate, the firm can then maximise their automation which means maximising the cost they can take out of the business.

If a system that can really transform an adviser firm and the way they can interact with clients and providers costs twice as much as a system with limited capacity, isn't the more expensive system better value?

IFAs are great at pointing out to clients the pitfalls of allowing a silver-tongued direct sales-person to sell them an invest-ment product, yet so many firms buy their system from the best software salesman rather than the best product.

Any adviser firm buying a client management system is likely to be living with that system on a daily basis for many years.

Failing to carry out a detailed objective analysis of both the business requirements you want to support and the ability of each of the different potential suppliers to meet those requirements could be a decision that might live to haunt anyone.

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