Can a wrap platform replace the need for an adviser to have their own dedicated client management system? This has been one of the most hotly debated discussions in the platform market for many years.
I have always been very much in the no camp. Each perform important distinct functions for the adviser and while, in theory, a platform could build all the functionality a client management system might offer, in practice, what are the chances that, say, building additional functionality to support regulatory reporting for protection business after the European Court ruling is ever going to feature that high up a platform provider’s development plans?
However, what happens when you take one of the best client management systems in the market and then they bolt on their own platform? A couple of weeks ago, I got to find out when I was given an exclusive look at the new True Potential wrap. Regular readers will be aware that the software and support services company achieved the highest score of the participating suppliers in our recent Adviser Software benchmarking study, and the highest number of five-star ratings when we measured the underlying elements of such systems.
True Potential already has some level of integration with a number of platforms, including Ascentric, Axa Elevate, Cofunds, Funds Network, Novia, Nucleus, Praemium, Parmenion, Skandia, Standard Life Fund Zone and Wrap, Sterling and Transact particularly on valuations. It has now partnered with SEI, whose technology sits behind a number of other bespoke distributor platforms such as Bestinvest and Cavanagh. The new service delivers a far deeper integration than currently offered by True Potential with any of the above.
A key part of the platform strategy is to give the advisers a range of self-balancing funds which they can implement for customers to reduce the cost of managing client’s portfolios, while at the same time giving IFAs the option of using a wide range of investment vehicles including funds, ETFs and stock and shares if they want to provide a bespoke service.
As the system is fully integ-rated, all documents created as part of the process, for example, summary of investment objectives, asset selection process, evidence of research, a record of all the areas explored with the client and what they have invested in are documented in a concise fashion, are then repopulated back to the True Potential system for retention for regulatory, compliance, treating customers fairly and other processes.
Having agreed the client objective, investment strategy and wrappers selected, an adviser can then agree fees with the client for initial, recurring, any switch fees and one off charges. These can accommodate different charging structures for different products.
All the information captured that is needed for account establishment is automatically populated to an application summary, which is also validated for any missing information. This includes a summary of client information, details of all accounts to be opened, investments to be purchased, as well as charges and fees.
The adviser confirms anti-money laundering evidence using True Potential’s integration with the adviser’s mobile phone to capture copy documents. These are retained as scanned documents within the client management system.
All mandatory documents such as the KFD, terms and conditions and application are dynamically generated. The client clicks to agree the client agreement and moves to payment options. These can cater for debit card, bank transfer and cheque. If paying by cheque, it gives details of who to pay the cheque to and generates a covering letter to send it to SEI.
Having made the payment, the system creates all the necessary documentation including the suitability letter and submits all documents electronically to SEI using XML to open an account and purchase the investments electronically, as well as creating the records electronically for the adviser in the True Potential client management system.
A core part of the True Potential proposition is that each individual client is given their own personal website, reflecting the individual adviser firm’s own brand. All the documents are placed within that individual client’s website so they can access them at will from within the client documents folder that is provided.
This also gives the client access to their online aggregation and valuation service, which will include all the platform assets, as well as real- time valuations for individual policies they hold with the adviser with a full range of life and pension providers. They can also access and change their fact-find, send secure messages and view performance history.
This is all taking the level of integration between adviser systems and the wrap platform way beyond anything else I have seen to date. While already leading edge, if the company were to add some pension-switching comparison services, I could see enormous potential for aggregating existing assets and achieving major savings for clients.
At 40 basis points, this may not be the cheapest-priced platform, the improvements to operational efficiency, achieved by the tight integration between the platform and the client management system, should translate to major for savings clients after the RDR. This could means that clients who would otherwise be unprofitable can be retained.
The outcome on this union may result in a significant change in the direction of the whole platform market. It shows what can really be achieved by making the platform and client system really work together.
This is exactly the sort of execution I have long believed is the best way forward for advisers and the platform community.
It also demonstrates what Standard Life can achieve with their integration with Focus and the potential for Sesame One, paired with the right client management system. I have not yet had the chance to produce a full benchmark on True Potential wrap but instinctively I believe it may just have set the new standard to aspire to.
Ian McKenna is director of the Finance & Technology Research Centre