Chris Davies: Occupying the middle ground as a cyber-adviser


Never in a month of Sundays did I think my MSc in Organisational Psychology would be useful within the retail financial advice industry. After all, this sector is highly transactional, conservative in approach to change and driven by tight regulations.

Yet we have seen great interest in how new technologies are developing and can be applied to business models to create efficiencies of scale, streamlined propositions and increased client centricity.

I have been pleased to see a huge uptake in the use of cash flow within the adviser community over the last 18 months. According to the latest results from our adviser benchmark survey the proportion of firms using it in some shape or form has risen from 45 to 78 per cent.

The cash flow technology firms have also started to up their game. For example, Prestwood is now in the cloud, offering access to its comprehensive back office-driven tool through devices such as tablets and smartphones.

O&M has entered the market with a neat profiler tool that enables users to compare and contrast the new pension freedom rules and incorporates features such as phased flexi-access drawdown.

Elsewhere, Voyant is progressing with its “blocks” technology, which focuses on individual specialist areas and thus has the potential to facilitate simplified advice if the adviser community can unleash its fear of the regulator in this area. With Voyant and Intelliflo IO recently marrying their application programme interfaces we now have a powerful proposition for all IO users.

Meanwhile, IRESS XPlan’s tool is very much aligned to its back office system and thus integrates well for IRESS users.

We also have the client-facing apps such as Moneyhub, which brings client centricity into focus with its user-friendly smartphone app. Clients can play around with their assets and liabilities to provide instant information about their budget forecasts.

With other cash flow tools besides we now have a great opportunity for those progressive adviser firms to blend their propositions with such technology. With all the noise about robots taking over, the case for embracing a cyber strategy that extends (not replaces) the relationship model should get stronger.

This means blending the human and robot approach. Adviser firms need to create a “middle office” by combining back office technologies such as IO or IRESS with front office operations. Cash flow does this well. It is a classic enabler tool. It facilitates management information and data communications across both back and front office departments creating a “value hub” that can be harnessed to deepen existing client relationships and attract new ones.

Here are five strategies to consider:

  1. Centralised investment proposition philosophy: Creating a CIP around the desired client experience means the firm is in control and not swayed by product providers. This means client and business management functions, investment committees, administration and service supports are structured around what the client values, not the business’ stakeholders.
  2. Data feeds: Ensuring all client data and MI is collated and fed into the back office technology, and that this can automatically feed into a cash flow tool, is very powerful. This will streamline the advice proposition and create efficiency for the business and clients.
  3. Document gates: Ensuring client documentation is designed and aligned to the software used (such as creating a fact find “lite” to engage new clients and allow for the information to automatically feed the back office and cash flow technologies) will enable administrators, paraplanners and advisers to become more economic in their roles.
  4. Roles and responsibilities: Aligned to the point above, we should then have skilled cyber workers who know where the data is stored and can utilise it quickly to ensure the CIP and firm philosophy remains true to its clients’ expectations and values.
  5. Planning process: This can be reduced or expanded depending on how the service proposition has been structured. This means an inefficient six-step process can become a profitable four-step process synced with the CIP, for example.

By harnessing human capabilities, incorporating new technologies and creating middle offices, we will see cyber advice become a much sought after commodity: one that can be delivered relatively cheaply and skilfully, ensuring regulatory suitability.

Chris Davies is managing director at Engage Insight