Ian McKenna: A new benchmark for tech providers

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New services to be added to Intelliflo’s Personal Finance Portal towards the end of June will make it easier for firms to deliver automated advice that complements their traditional model. The move will be beneficial not just for Intelliflo users but all advisers that want to use technology to expand client relationships.

Indeed, it establishes a baseline for what advisers should expect from their software suppliers, both in terms of cost and functionality, to add on to their core client management systems. Importantly, while payments will be negotiated individually with firms, charges are only incurred when clients make investments using the service.

I recently saw a preview of the software. Space does not allow me to produce a comprehensive summary of the features in this column so I will to look to create such analysis on another occasion. I would, however, encourage all advisers to look at the service themselves. A couple of key points should be highlighted.

First, Intelliflo has built a system that allows advisers considerable scope for controlling the outcomes and the level of cases that can be expected to proceed electronically. This is not a black-box system. I also particularly like the approach taken to the risk profile questionnaire. If significant inconsistent responses are generated, the client is invited to take the test again but cannot see their previous answers. If the answers are inconsistent a second time the case must revert to an adviser. A separate process applies to minor inconsistencies.

There is an argument circulating that if advisers source their software from a single supplier, they are effectively being commoditised and all end up offering the same service. I feel there are other key factors to consider at the same time. Firstly, an adviser proposition is not defined just by the technology they have but by how they implement it and, more importantly, their wider service proposition.

Also, building technology is a deep-pockets game. The start-up digital advice businesses looking to compete with adviser firms have invariably secured significant private equity or similar funding to support their software development. Intelliflo users can now access comparable services within the pricing of the core client management software they already pay for. This establishes a pricing point and means other software suppliers will need to follow suit if they are not to look expensive.

This is a fully automated advice service producing a personal recommendation for the client. However, Intelliflo has built a strong omni-channel capability into it, meaning clients can start down an automated advice route but then switch to engage with advisers in a range of different ways using integrated video, audio and online chat. Currently, it provides an accumulation service with a stocks, shares and funds Isa and a general investment account linked to Cofunds. Further product wrappers, investment providers and a decumulation service will follow.

The combination of personal financial management aggregation with automated advice is powerful. I have long believed well executed personal financial management is the key to transforming the nature of advice relationships with a far wider constituency of clients than are served by the traditional advice market. Having studied the subject extensively around the world
I am in no doubt it can be the cornerstone on which to build services consumers will both value and can afford.

Linking it through to automated advice really puts adviser firms in a strong position. That such components can be deployed by firms with very little initial investment as a bolt-on is a win for all advisers that see digital as an opportunity. I must point out here that True Potential has also offered personal financial management for some time and also offers a non-advised self-service option.

Ideally, Intelliflo should also provide a self-service option and True Potential add automated advice. Both firms are making it easy and economical for advisers to offer services that are more sophisticated than the vast majority of start-up digital advice firms in the UK. Other software suppliers will doubtless extend their offerings to add similar services. They should move quickly if they do not want to be left behind.

Ian McKenna is director of the Finance & Technology Research Centre