Advisers have never had a better range of technology options to help them automate their firms. Software now exists to support just about every part of the advice process.
There is increasing evidence that those who use more technology throughout their business are able to support more clients, have more assets under advice, are more profitable and, not surprisingly, are actually happier.
Such systems liberate advisers to do more of what they prefer doing: spending time with clients. They also provide the necessary administrative support to meet ever rising regulatory standards.
With this in mind, it is crucial for platforms, life offices and asset managers to understand how the technology they use helps advisers run their businesses smarter.
Fact-find tools that harvest client information from expert sources, automated needs analysis and goal planners, and risk profiling, asset allocation, portfolio construction and rebalancing tools are leading to a world where advisers have the tools to streamline all aspects of the advice process.
Importantly, more and more of these systems are being integrated to minimise the need for manual rekeying.
This is critical, as repeated manual data entry can lead to human error. For the most part, this has been an area of major progress in the last couple of years. However, the main area where things have not improved as much is integrations between platforms and adviser technology.
The current level of data being exchanged is only just scratching the surface of what could be achieved.
Ever since platforms first emerged in the UK at the end of the last century there has been debate over whether advisers could rely upon them for all their technology infrastructure, thus removing the need for a separate client or practice management system.
Personally, I have never thought an independent firm could run all of their record keeping and administration on technology supplied by a platform.
If an advice firm accepts technology that delivers a substantial operational benefit they do not actually pay for, there must be the potential for a conflict with FCA inducements rules. If this issue can be overcome, there is still the fact very few platforms provide any significant capability for advisers to report held away assets , that is, those the client has invested in but that are not on the subject platform or even under the adviser’s control.
Equally, if the adviser transacts any business other than on that platform they will need external IT capacity to streamline their regulatory reporting.
Perhaps 20 years ago, when both sectors were in their infancy, platforms and adviser software suppliers were effectively competing but each have long since demonstrated their value, so it is time for greater collaboration.
Platforms that can deliver the most streamlined integration with advisers’ software will maximise the benefits to everyone.
Why do platforms not make every element of client data they hold readily available to advisers’ systems? Our recent research suggests only two platforms make transaction history – so crucial for advisers to access for capital gains tax calculations – easily available via third-party systems.
And why have we not reached the stage where an adviser can execute transactions on a platform from within their own core systems? This would bring huge benefits to all.
In a world where APIs are increasingly being used to enable advisers to move easily from one package to another with access to all the data they need, there is a great opportunity for platforms to embrace the same level of data sharing.
As firms step up their use of technology to improve their efficiency, reduce costs and enhance customer service, it is essential for asset managers, platforms and life offices to do everything necessary to streamline their systems with those of advisers.
Such organisations have a great deal to gain themselves in improving communications with advisers and reducing their own costs. Let’s make detailed integration a priority between all business partners.
Ian McKenna is director of the Finance & Technology Research Centre