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Ian McKenna: Lessons from the US on advice, regulation and tech


Last week saw yet another link-up between international regulators, with the Monetary Authority of Singapore and the Swiss Financial Market Supervisory Authority signing a cooperation agreement to foster greater collaboration on financial technology.

The FCA has signed similar deals with MAS and the Australian Securities & Investment Commission, which in turn has probably been the busiest of regulators, also securing deals with MAS, the Capital Markets Authority of Kenya and the Ontario Securities Commission in Canada.

While US financial regulators have yet to embrace collaboration to the same level as their Asian and European counterparts, and with the UK now nowhere near as far behind in terms of advice automation as it was, there is still much to learn from how technology is being applied to advice there.

For anyone wanting a crash course in the US advice software market, the T3 conferences are the place to go. My last column looked at the most significant launch at its recent show from a UK perspective. This week, I want to highlight some other organisations that could have much to offer if they came to our shores.

The big news in the US advice market currently is that the Department of Labor is introducing an obligation from April that all advisers act as a fiduciary when advising on pensions.

Meeting these rules has become the hot topic in terms of any software developments, pushing the previously dominant automated advice into a distant second.

Thinking in the US has not yet progressed to the stage where the changes in regulation are seen as an opportunity. In fact, the overwhelming view is they are negative. That said, in practice, they will mean many firms becoming stronger and more independent, as is the case in the UK.

But while the DOL rule is interesting, this summary focuses on what can be learned in terms of delivering information to clients more effectively. So what really caught my eye?

Bucket Bliss’s software is so simple I am amazed I have never seen the same idea presented previously

First up, Canadian software supplier Equisoft, which provides a web-based solution called WealthElements to help advisers create wealth management plans and proposals for clients and prospects. Its new client portal functionality allows advisers to offer varying degrees of automated, digital services, depending on client needs and preferences. Advisers can transition from full service to automated and vice versa. I can see significant scope for this in the UK.

Meanwhile, no summary of the US market is complete without a reference to Fidelity-owned eMoney, which has 41,000 adviser users there (more than the entire UK adviser software market combined). It is a great shame Fidelity is not choosing to share it with UK advice firms, as it has some really powerful solutions.

However, my overall favourite proposition at the show was from Bucket Bliss, whose software helps advisers manage portfolios for clients who can expect to spend a long time in retirement. It is so simple I am amazed I have never seen the same idea presented previously.

The software divides a client’s retirement assets into four portfolios: one ultra-conservative to cover income needs over a one- to five-year time horizon; a further conservative portfolio to accumulate funds that will be needed to provide income six to 10 years hence; a more aggressive portfolio for the period 10 to 15 years out; and an even more aggressive portfolio for 15 years and beyond.

It visualises this concept beautifully, clearly articulating the strategy to the client in ways that are simple to understand.

Bucket Bliss also has an automated advice proposition. Like all such US propositions it would need a lot of work to bring it to the UK because of our much higher suitability standards. However, it is an approach many entering retirement would find compelling.

Overall my visit to T3 provided many new perspectives. And while the US could learn a lot from the UK in terms of financial regulation, there is still a lot for us to take from how they are applying technology.

Ian McKenna is director of the Finance & Technology Research Centre



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