The question has been raised as to whether advisers are failing clients in not taking account of very real advances in science and technology
My trips to the US to look at emerging technology usually give a valuable glimpse of what advisers here can expect to see over the next two to three years.
My most recent trip provided many such insights but it also highlighted the fact an increasing number of very qualified individuals are starting to talk about a far more radical vision of the future.
If you are giving the keynote address at an adviser conference, making your opening gambit a statement like “most of the advice being given today is fatally flawed and arguably criminally negligent” is one way of getting the audience’s attention.
This was exactly the message delivered by Ric Edelman in his speech to the Technology Tools for Today conference two weeks ago.
Edelman, himself an adviser with 30 years’ experience, proceeded to explain why retirement planning should now be based on life expectancy of 120 years because of the advances in science and technology.
I do not want to spend the whole of this column exploring these arguments, although I will say his statements entirely align with my own research. Many of our sources are the same; for example, Singularity University, an organisation created by Peter Diamandis and Ray Kurzweil. The latter, who is now responsible for leading innovation at Google, has an over 80 per cent accuracy rate for predictions about the future.
Among the facts Edelman cited in support of his views are that 3D printing already prints body parts like ears and spines, drugs and food, and that by 2030 addictions, heart disease, respiratory illness, diabetes, obesity and cancer will all be cured.
If you want to read the detail of his arguments, they can be found in his best-selling book, The Truth About Your Future, or visit Singularity University at su.org and be prepared to change your thinking about just about everything.
It is also worth looking up the work of Dr Michio Kaku, an American futurologist who has fascinating insights into the future of life and health. I would strongly recommend his Youtube channel.
With life expectancy now being well over 100 years for much of the population, do the cash flow planning tools you use go beyond age 99? Many do not.
Trends to watch out for
Turning to the more immediate future, I saw two major trends likely to change the UK adviser software market and a third with considerable potential at the conference.
First, virtually all financial planning and cash flow planning systems in the US are now embedding data aggregation to extract consumers’ financial information for their banking and other online relationships.
Advizr, eMoney and MoneyGuide Pro to name just three all have such services as standard. Wealth Access has produced an excellent case study on how such capabilities enabled the 130 adviser firms that use its platform to identify $4.8bn in held away assets (i.e. those invested by the client that the adviser does not currently control) and convert 65 per cent of this to money under their control, increasing assets under management by $3.1bn.
In the UK, aggregation has been led by practice management system providers like Intelliflo and True Potential, or standalone aggregation providers like MoneyHub and Moneyinfo. With Open Banking now a reality, financial and cash flow planning tools are missing a major opportunity by not offering such services.
Meanwhile, the vast majority of US adviser software suppliers now deliver deep integration between their various systems using application programming interfaces. This is another trend we can expect to see more of.
In recent weeks, Intelliflo and eValue have rolled out their API integrations, the former via its API store. Platforms need to start to offer similar capability to enhance their offerings.
I have previously said here that I see Standard Life’s move to roll out elements of the Focus Now:Plan cash flow tools to platform users and the FNZ investment in Advicefront as the shape of things to come.
In the US, Royal Bank of Canada has put together a compelling deal for advisers using the Circle Black account aggregation and portfolio analytics service.
It means advisers can access an impressive array of tech, including Riskalyse for risk profiling, MoneyGuide Pro for financial planning, Redtail for CRM and Vestmark for trading and rebalancing, as well as the Circle Black software, for $175 per month – an 80 per cent discount from the products’ retail prices. This pricing is conditional on the advisor using RBC as their custodian.
If UK platforms are not going to offer their own technology to support planning functions, they would be wise to explore how they can follow RBC’s example in leveraging their buying power.
I doubt one could achieve quite the level of discounts that have been put together in the US for reasons of transparency and avoiding inducement issues. However, the larger platforms should be in a position to put together bulk deals justified by delivering genuine enhancements to service and operating efficiencies.
If the UK advice software community will not play ball, I know a few very sophisticated systems in the US where they would be open to discussions for the right size of deal.
Ian McKenna is director at Finance & Technology Research Centre