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Ian McKenna: Passport to the new world

Adviser-charging will make it crucial for advisers to have a far better understanding of their operating costs than ever before and there is a major role for software in achieving this objective.

This need is driving the emergence of a new type of adviser software, proposition management systems. A number of these packages are now emerging but few have impressed me as much as the Passport which has been built by The Ideas Lab, the consulting practice of Robert Reid and Roderic Rennison.

The system is designed to work independently of any client management software that the adviser firm may already have. This will be a major advantage for organisations that have made a substantial investment in existing solutions as it could be integrated with other industry software.

A good example of this is the implementation for Positive Solutions where the package is known as Evolution.

To help the firm document its RDR-readiness, the system provides an action planner designed to be completed by the company principal and explores key issues on preparing for the RDR.

This captures key information about how the adviser firm is set up. It asks for factual information on how much data is available, RDR planning to date and explores the user’s attitude to their business, such as if they enjoy advising and specific types of client they concentrate on.

An RDR competence area captures the progress towards QCA level four qualification and can be used to recognise personal and regulatory deadlines.

The user sets up staff charging rates for various types of staff, such as, advisers, administrators and paraplanners. Different rates can be applied to different activities such as advising, travel and research.

A timesheet module is provided which can operate independently if the adviser is not yet ready to implement the full process but, having explored the power of the full proposition, I believe firms would be well advised to take advantage of the whole package.

The user creates a full list of client firms and individuals advised in the client firms (a similar activity is undertaken for individual staff).

As the system is used on an ongoing basis, it can record what work is carried out for each client, what was done and how long it took. A free text notes area is also provided for each entry.

The financial modeller walks the user through a detailed process to capture all the expenses of running an advice practice including fixed and variable costs and then allows substantial modelling of the businesses costs including applying a series of what-if scenarios.

The segmentation area allows the user to explore different client attributes, for example, assets under influence, if those assets are generating an income or not, the source and volume of any referrals from a relationship and the amount of time a relationship takes to service. From this, clients can be segmented by their overall value to the business.

The proposition builder is designed to identify which proposition best suits the adviser’s business model. This enables the adviser to understand the levels of service they want to give to different segments and includes holistic advice, a structured or product fee based service, focused advice in a single area, a one-off project or a product-centric service.

For each proposition, the user considers a six-stage process covering relationship, data, analysis, the plan, implementation and monitoring. It enables the adviser to identify how many processes there are in each proposition and the overall charge appropriate for the work done as part of each proposition.

The user moves on to the process builder which identifies individual activities and processes that are linked to each proposition, again using the six overall processes listed above.

A detailed summary of all the actions that will be undertaken as part of an advice proposition are listed, showing who will do what and the cost of each activity.

It is difficult to understate the level of change that advisers are being expected to make as a result of the RDR. For most, it will involve fundamentally restructuring their commercial and operating models. All too often, advisers have done vast amounts of work for clients for which they have not charged.

Having this software will enable advisers to have a clear understanding of the costs in their business and how much they need to charge to remain profitable. This will be crucial to IFAs’ survival and I believe it could be invaluable to firms, especially those that have left it late.

Overall, this package provides a comprehensive RDR transition tool for advisers. It looks at how much time firms spend on a case-by-case basis to identify the true cost of advice.

It will take firms time to assemble and enter all the data initially but in the long term is should save many hours and enable firms to manage effectively and professionally.

Passport is designed for firms of 10-plus advisers and costs are by negotiation depending on the overall size of the firm, number of users and a range of other factors such as branding and any other bespoke elements.

Ian McKenna is director of the Finance & Technology Research Centre



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There are 3 comments at the moment, we would love to hear your opinion too.

  1. I’ve got news for us all.

    RDR is going to be a social experimental disaster, on top of gloomy global economic news, retail investment funds will decline in number, retail investments made by investors will decline, markets will not have the capital available to lend to business and the IFA businesses that do survive will only be able to deal with wealthier clients.

    Segmenting your client base into so called “profitable” clients and “non profitable or lower profit” clients is a form of discrimination against ordinary working families, whose resources are limited and squeezed by the cuts.

    No computer software program can help advisers make money so that we can pay for the exorbitant costs of the FOS, FSCS, FSA, MAS etc etc.

    Ordinary consumers will be disadvantaged and the iFA sector will become a ghost, only visible to wealthier clients.

    What price the RDR – Too high!

  2. @ Ned 10.07. As your tutor in future fortune-telling I award you an A*. 100% accuracy.

  3. totally agree with you Ned

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