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Ian McKenna: Why are providers building standalone adviser software?

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A couple of weeks ago an email from Panacea Adviser caught my eye, highlighting Just Retirement’s new Quick Income Builder tool. On closer inspection and after a few more clicks I arrived at a plethora of other tools from the deferred income specialists.

These include a personal taxation calculator to look at the potential liability of releasing cash lump sums for a client’s pension, an indicative lifetime mortgage tool to see how much a client could release from their property, a budget planner drawdown risk calculator to model the probability a client will run out of money while still alive and a longevity estimator. There are actually six more tools but I am not going to list them all as I do not want to spend the whole column on this.

What I do want to say is that they are generally useful tools to take a client through particular situations. After a few screens capturing the relevant information, they come up with a simple analysis that can be viewed on a device, printed or stored as a PDF.

Overall I actually quite like the look of these Just Retirement tools. However, while I can see them having some use giving an adviser a simple indication of key numbers to discuss with clients, I cannot get away from the fact the data will need to be manually rekeyed at some point to provide more specific advice.

Can an adviser really make a case for using them given they do not share data with other systems in their business, even though they appear better than most of what gets built for advisers by life companies and platforms?

Invariably these are stand-alone bits of software that look at an individual part of how an adviser might work with a specific insurer. Providing an adviser with a piece of software that will not talk to their core systems is like giving a British builder a power tool that works on an American voltage.

Building these tools can be a lucrative source of income for software suppliers, as institutional budgets are usually far larger than advisers are ever willing to pay. Indeed, it has to be said that many of the most significant advances in adviser software systems would probably never have been built if there had not been a life office or platform willing to subsidise the investment.

While this is good for the software supplier and potentially for advisers, is it really giving the life company or platform a decent return on what they have spent? Not in my experience.

But having questioned the case for providers and platforms building advice software, you do get the occasional offering that shows some organisations can be truly exceptional. A great example of this is 7IMagine from Seven Investment Management. This piece of platform technology is a joy to use.

I have had a sneak preview of some of what is coming next for that service and it is great. However, I have to wait until the adviser version is ready before I can write about it in detail. It is also worth mentioning Seven IM is looking at building true integration with leading adviser software systems, showing a far better understanding of what advisers really need than many of its peers.

But anyway, back to Just Retirement. As mentioned, I like its tools. However, I cannot help thinking it and others should spend more time challenging the business cases for building standalone software. Ideally, they would look at how they can build it to complement advisers’ other systems. This can be done but it takes rather more specialist analysis and understanding of adviser processes. Time spent getting to grips with such issues would be a sound investment.

Ian McKenna is director of the Finance & Technology Research Centre

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Comments

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

  1. Ian
    We couldn’t agree with you more! As you know, we produce back office software for IFAs and we set out to make it completely stand alone. However, the ability to communicate with providers and exchange data is very important. Integrating a providers offering tightly into the back office system might be challenging but that is the way forward. I leave the details to the more technically able!
    IFAs do not want to go internet hopping or have many applications that do specific things. They truly want a totally integrated solution, a single application that can communicate with providers and their systems with very little work and even less complications!

    • In short we need the “silver bullet” arrangement that operates in the USA it allows easy integration and is something we should be pushing for, there are some instances where integration is not required but even them the ability to export files should be a default.

  2. Providers can’t even agree on common things like Unipassand secure email and wonder why we all get fed up with them.

  3. Justine Pattullo 11th October 2016 at 1:45 pm

    Well said, Ian. Couldn’t agree more.
    Data movement as opposed to data rekeying (and all the risks that that entails) is an area where time and most certainly costs can be reduced across the industry.
    Effective integration between platforms/providers and adviser software systems is a priority to ensuring compliant and secure data movement that is efficient – ultimately saving consumers money in the longer term.
    We hope that adviser software suppliers and their platform/provider partners take up the opportunities that the Integration Hub from Origo offers: quick, simple, secure integration with multiple partners without the bother of multiple installation maintenance overheads.

  4. Aiming to integrate with core systems is actually a fairly short sighted solution – if better than the current situation. Even that is forcing the data into a process and limiting its usefulness in future.
    Data structures that are designed for applications and processes can be very efficient for those uses, although frequently not fitted well to users views of their information or lives. They quickly become unwieldy or unworkable when you start trying to apply them to more, and different systems and uses. Questions that are tailored to one function tend to capture information in a way that is only useful for that function. When you look at that information for another purpose it doesn’t fit.
    I often point to a real life example, I won’t embarrass the company, that exemplifies this perfectly.
    There is, or was, a piece of financial software that asked a simple question about a client’s resources.
    “What is your income from dividends and state benefits?”
    That may have been perfectly sensible for the original purpose but it made that data, collected from many people, absolutely useless for many other functions.
    We carried out, some years ago, a big piece of work which aimed to avoid this. We produced a data structure, Citizrep, which is a representation of a citizen, in a detailed granular schema which is entirely separate from any application. This system agnostic way of describing a persons situation can easily be fitted together, using the relevant pieces and levels of detail, like Lego blocks and can be simply manipulated to make it fit different systems.

    Why, you may ask, is this not being widely used as an industry standard? Simply put, it was designed to allow multiple local authority departments to capture information in one hit and to use that data across departments and functions. The problem was that no department would buy something which gave value to other departments, at no cost to them, and local authorities
    still don’t buy things corporately.
    In financial services, I’m sure that an industry standard set of data could make interchange of data and such things as multiple quoting extremely easy. It would be so much simpler to compare offerings and to move from one supplier to another than it is today and one set of data could be used for many different products.
    I suppose my doubt is whether that might be a little too easy for some people to welcome.

  5. Beware of providers capturing your client data whicharges they don’t NEED. Many eyeing direct sales push to compete with you.

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