Having spent much of the last two months in America, looking at leading edge advice firms and technology that has the potential to radically transform both the cost and quality of advice, the latest stage of my odyssey has been a visit to the FPA Experience conference in San Antonio, Texas.
The show, which bought together approximately 1,900 American advisers, as well as delegates from every continent on the planet, provided a valuable insight not only to the technology being used by US advisers but the similarities in the challenges they face compared to advisers in the UK and elsewhere.
A further reason for this trip was to identify software suppliers who might bring their products to the UK.
For some time it has been my belief that whilst there are a significant number of adviser software providers in the UK market, at best a handful of these would pass institutional due diligence. At the same time I am convinced that the RDR will precipitate an industrial revolution in the business of financial advice, leading to an increased number of scalable adviser businesses.
Over the next three to five years, allowing for bank assurance, mutual bank assurance, life offices and platforms developing their own distribution businesses, which is inevitable however much they may deny it now, as well as new players, I see a market of perhaps 75 to 100 institutional quality advice businesses in the UK.
Against this background the half a dozen or so UK advice software suppliers of this quality are simply not enough to meet the appetite for suitable systems that will emerge as a result.
With an obvious convergence taking place amongst financial services regulators around the world and many of the advances achieved with cloud based computing I see it as more a case of ‘when’ rather than ‘if’ for a range of global software suppliers will emerge.
In areas like small business accounting and HR this is already beginning to happen and I am sure personal finance and advice systems will follow.
I came across a number of obvious candidates in this context, although it would not be appropriate for me to specifically identify them here.
One of the most striking differences between advice software in the UK and the US is that in America software suppliers have clearly put far more effort in to collaborating with each other and allowing adviser firms to select their own chosen solution for different parts of the business process.
At least in part this is seems to have been facilitated by the Your Silver Bullet initiative through which software suppliers sign up to collaborate with their peers.
It may be that the latest Origo repopulation standard could go someway to address this, however, at this time I do not detect the same degree of appetite between UK software suppliers to work together as is visible in the US.
Talking to American advisers about the benefits this brings I have no doubt that the similar approach would be just as valuable to UK advisers.
It is also noticeable that platforms are developing far deeper relationships with software suppliers than has today been achieved in this country. For example, Charles Schwab appears to be really delivering on a strategy which the majority of UK platforms have been paying lip service to, but failing to deliver, for many years.
Its intelligent integration program aims to push all the information that an adviser needs about dealing with clients through to advisers’ CRM systems. This includes not only transactional data and information for statements but providing a range of planning tools which can also communicate with the advisers system.
Notably Charles Schwab is encouraging advisers to make a CRM the heart of their business and aggressively building the necessary integration.
I often hear UK advisers complaining of the lack of true customer relationship management capability within most Client Management Systems.
It is clear in the US market that software suppliers tend to focus on specific parts of the operational process rather than delivering an end to end solution. It was also very noticeable that American software providers invariably include clear evidence of the level of return on investments that an adviser can expect to see from their software and the time it will take to recoup the expenditure made, as a central part of their presentation.
American advisers generally seem far more appreciative of their software suppliers. On more than one occasion I witnessed customers standing up in the middle of a presentation to evangelise the benefits they had achieved from using an organisation’s software. I don’t remember ever witnessing a similar occurrence in the UK.
Risk profiling software provider Finametrica, which will be well known to many Money Marketing readers, seems to have this down to a fine art as its presentation featured a whole host of industry leaders singing their praises, at least one of whom was at pains to point out that none of them were being paid for the endorsement, they were simply all passionate about the product and wanted to share their views with others.
The conference also featured a number of international events, which gave me a hugely valuable opportunity to gain further insight into the ways in which advice is evolving around the world.
I certainly found some of the practices being operated in emerging economies encouraging, suggesting to me that the learning process between old money and new can be beneficial in both directions.
In recent years the UK industry has become very inwardly focused, not without reason, however, looking around the world it is evident that in so doing we are missing important lessons that are being learned elsewhere.
In the coming months I am going to put what I have learned internationally into practice with those I work with.
An extended summary to highlight a few of the best innovations can be found at my blog on the F&TRC website.
Ian McKenna is director of the Finance & Technology Research Centre