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Ian McKenna: How Intelliflo rewrote the rulebook  

Its new model portfolio service is set to change the way advisers work, leaving platforms and life companies with some big decisions to make

Ian McKennaAnnouncements at the Intelliflo conference last week will have far wider ramifications for the advice market than may be immediately obvious. It was the newly launched Integrated Model Portfolio Service that will see investment manager parent Invesco charge advisers £1 per client that really caught the headlines.

The service makes operating procedures many advisers have been requesting for years a reality, by removing manual data entry and the need to log in to platforms’ individual systems for the rebalancing process.

This makes it essential for other adviser software suppliers to replicate similar functionality.

Many of the key decisions about which products and investments to choose are no longer made within the practice management system, so a strategy built just around communicating with the back office of a firm is flawed.

Platforms, asset managers and life companies need to understand which technologies influence which decisions. There is time for groups to build similar services but they need to move quickly. Indeed, this is not an area where anyone can afford to be left behind.

£1 model portfolio service launched by Invesco’s Intelliflo

Intelliflo’s announcements will undoubtedly change the way advice firms work and are already being very positively received.

Last week, Surrey advice firm Clairville York founder Les Sharpe told me: “I don’t want to use each individual platform’s technology because I’m not used to it and I don’t want to see each individual provider’s expensive logos.

“My clients have already decided to deal with my firm. A straight-through process will save so much time and improve accuracy.”

Sharpe had already spoken to three platforms to make it clear supporting these features would be a huge factor in his future due diligence. He added: “This instantly replaces discretionary fund managers for me. I’ve just got to decide which model portfolios I want to use.”

Money Honey Financial Planning managing director Jane Hodges says: “Anything that makes the process for a client more streamlined and requires less work for the adviser, so they can pass on the saving to the client, has got to be a good thing. This will also put the cat among the pigeons in terms of other organisations being completely paperless. It will undoubtedly influence our platform selection and business placement in the future, with supporting these capabilities significantly determining who we place investments with.”

Some platforms may take the view that Intelliflo’s 35 per cent market share makes it impossible for them to resist embracing the iMPS initiative, and will not be willing to support the same services for other software suppliers. This would be a grave mistake. Just like any other market, the advice community needs healthy competition. If Intelliflo is allowed to be the only software supplier to offer such a streamlined process, it will only grow its market share even further and it would not be good for it to become overwhelmingly dominant.

Ian McKenna: £1 model portfolio throws down the gauntlet to industry

Consolidation in the adviser software market, especially in the area of practice management, is essential. According to the FCA, there are 32,000 investment advisers in the UK. Assuming an average of 1.5 support staff for each adviser, that makes the market around 80,000 licences. Given there are in the region of 20 practice management system suppliers, and one has a 35 per cent market share, I simply do not see how all of them can survive.

Platforms need to think about how they can deliver similar deep integrations to those Intelliflo now is. And these issues are not limited to just platforms; they should also be considered in the context of life insurance, annuities and any other product that might be distributed via an adviser.

The Origo Integration Hub will make this easier for smaller technology suppliers, but it should not be seen as the answer to everyone but Intelliflo. And just having integrations with practice management systems won’t cut it either. As mentioned, most of the key decisions on client recommendations are now made in a range of different systems, so it will be crucial to give advisers the right data in the right systems at the right time, and in the way they need it.

Intelliflo’s announcements will trigger major changes in the future direction of technology adoption for the whole market. From the smallest advice firm to the largest platform, the right plan for their future will be very different today from last month.

Ian McKenna is director of Finance and Technology Research Centre

You can follow him on Twitter @ianmckennaftrc


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There are 6 comments at the moment, we would love to hear your opinion too.

  1. I agree with Ian’s strategic analysis 100% (although I think he’s a bit optimistic about how market-ready this Intelliflo service is in practice).

    Ten years ago I though the platforms would do all this stuff, but a tsunami of regulation has used up their development spend. That and their refusal to recognise standard electronic signatures (like DocuSign) means advisers are looking for alternatives and platforms have lost the initiative.

    The first question we now ask potential platforms is how good is your integration with Intelliflo?

    The point about DFMs above is also on point. They will have to work hard for their slice of the pie in future.
    Invesco’s purchase of Intelliflo is the equivalent of Ford buying Uber. It’s the software platforms that have the power now, not the providers and fund houses.

    My only caveat is that the full straight-through functionality from Intelliflo through to the platforms is not there…yet.

    So even though I will not be using Invesco funds on FundsNetwork, I wish them all the best so that they prove it works for other providers to join the service.
    My message to Intelliflo: Your strategy is correct, now you’ve got to execute.

  2. Consolidation in IT services for IFAs? Ian is showing his age.
    New tech coming on stream every year requires new firms – not less. IFAC’s BAT system has 100 IFA firms started using it in the last year alone

    • Sorry C Palmer you are missing my point, great to get 100 firms joined in one year, but how many seats is that and what are the overall number of firms/users to support the development budget? Advisers are not well served by a fragmented market of 20 plus sub scale practice management systems all struggling for resource.

      There have been adviser software new entrants who have achieved scale, e.g. Cashcalc, but it is unlikely to be in the practice management system market. A better market for advisers would be maybe 5 main systems providers with a decent market share able to drive competition and innovation. New scale solutions are likely to be created elsewhere in the advisers tech stack.

      • Ian,You’re behind the curve – the industry has changed. Twitter was built by 2 guys in a garage – you don’t need big teams to compete in software. Charlie

  3. Sorry but having seen a demo I totally disagree with Ian. This actually passes work back to the adviser and doesn’t even make that easy.

    Currently if you use an MPS the manager will handle everything, fund changes, rebalancing etc,

    This service passes that back to the adviser. I now have to get the clients permission to update or rebalance the portfolio. If they don’t accept it I can’t do it.

    Once the client does accept the rebalance I get notified but I still then have to go to the relevant platform and actually key in the re-balance, that but. Isn’t automated yet.

    So I can still only use a providers MPS that is on the system (currently just Invesco although we are told 7IM and 6 other are coming) and I now have to do more work which under a normal MPS is done by the provider.

    Am I missing something here because I’m not seeing how this benefits me or my client?

    • Darren, I’m not sure what demo you saw but having had the product manager take myself and two colleagues end to end through the code that is to be released imminently there are clear business benefits now. One of my colleagues is creating a step by step analysis of what will be live any day now and what will be further developments. I will post a link to it on here when it is online.

      Agreed it will be better when more model providers support the service, so lobby your preferred provider, the service is open architecture and Intelliflo. Equally platforms can implement the API. Will this happen overnight, no but it is a huge step in the right direction.

      A year from now when this and similar initiatives coming soon from Intelliflo competitors get scale advisers and their clients will be the real winners.

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