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Ian McKenna: Another App for RDR preparations

Ian McKenna MM blog

With the RDR virtually upon us, an increasing chorus, from the FSA downwards, is expressing concerns at the extent to which advisers have adapted their business models to cope with the new environment.

Whilst firms should long ago have conducted a detailed assessment of their operating costs and constructed new propositions, it is apparent that large numbers of advisers have yet to undertake such work.

This activity is clearly a long-term project and in my view is best addressed using detailed cost analysis software, such as the Passport package from The Ideas Lab.

Installing such a proposition, however, is far from an overnight task. Despite having no hesitation in recommending any firms who have yet to put in place a suitable mechanism to support their RDR transition explore this and similar packages, anyone who has left it this late is going to need some urgent assistance in the meantime.

Any advisers in this situation who own an iPad may find the new Fees – Ability app from Aviva most welcome.

Last week I was given advanced access to this new offering. A simple and concise piece of software, it is designed to enable firms to quickly model the long-term profitability of clients over a period of up to 10 years by identifying the level of initial and ongoing income an adviser can expect to receive compared with the cost of serving the customer.

After completing an initial settings screen where the adviser enters their name, preferred e-mail address and default estimates of the standard time for new client servicing and ongoing reviews, including the time each will take and in the case of the latter the frequency, the adviser can also define high medium and low cost estimates for client servicing.

From this point users follow a simple three stage process to conduct an assessment for each individual client.

First they enter details of each of the contracts in the client’s portfolio. This can cover a wide range of products including pensions, wrap, investments, protection and annuities. As well as entering details of the amount invested, ongoing contributions projected growth rate etc the adviser can indicate the extent of percentage or fixed cost they would expect to levy under adviser charging for servicing the contract.

Next, the user moves to the costs section where they confirm the amount of time expected to be spent on initial and ongoing meetings. There is also the capacity to record any fixed additional expenses.

At this point I would have liked to have seen the ability to record time spent both in front of the client and in preparation or follow up and the ability to differentiate between adviser time and support time. Hopefully such functionality will follow in a future release.

Moving to a summary screen, the app shows both the revenue stream that can be expected and the underlying costs incurred to identify the profitability of the relationship over a ten-year period.

At this point the adviser can modify any of the variables to see how costs and revenue would fluctuate.

I am meeting an increasing number of advisers who are talking about offering a totally transparent proposition where they even engage with the client not just on what their costs will be but on the level of profit they will look to achieve.

Those taking this approach are likely to find this app especially helpful. Even if you are not looking to go quite that far, this is a valuable, if not an exhaustive, analysis tool to help an adviser quickly identify the likely level of income they will need to achieve from a client to operate on a viable commercial basis.

To support the launch Aviva has carried out research amongst advisers to identify the extent of current and future use of tablets by advisers. Its research confirms a view I have held for some time that tablet devices are driving real change through our industry. Nearly 400 were surveyed and a third stated that they already own a tablet device which they use for work.

Of those who do not have a tablet, a further third said they intended to buy one within the next six months. More advisers who either have or are planning to buy such a device indicated they would use it for business and communicating with clients than for personal use.

Noticeably the iPad was by far the most popular format adopted by advisers with over two thirds indicating their tablet was the Apple device. By comparison no other tablet achieved even a 10 per cent share in the market. There is significant evidence that those who can afford Apple buy Apple so the case for building Android apps for advisers appears to be limited, however, perhaps the more austere times the RDR will usher in may change this.

I believe this demonstrates a clear business case for developing apps for the adviser community.

In delivering this offering Aviva has made a valuable and timely contribution to help those advisers who are struggling to get to grips with their commercial model post-RDR.

Whilst it is not a replacement for a full proposition management system and there are several additional functions that could usefully be added, these would doubtless have taken longer to develop and this app is needed in the market now.

The App, which is free, should be available in the iTunes store around or shortly after this column appears. It should be a must to download for an adviser with an iPad.

Ian McKenna is director of the Finance & Technology Research Centre


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