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McKenna: SimplyBiz looks to the future with DT deal

This week’s announcement of the seven-year commitment that SimplyBiz has made to use Distribution Technology software is a massive endorsement of the software supplier.

It has been clear for some time that we are seeing a significant change in the way organisations which support advisers are approaching technology. No longer are such services “nice to have”, they have become a critical component of the network or support group proposition and those organisations without such services may struggle to survive after the RDR.

This deal sees the two organisations share a roadmap which will deliver services to support financial planning, customer management, proposition management, adviser charging and client portals to adviser firms as well as critically integrated trading capability with a range of industry partners. SimplyBiz joint managing director Neil Stevens is clear that he believes the RDR will drive a fundamental change in the way advisers work, with the vast majority of the value delivered to clients coming from the advisers’ own activity rather than from within financial products, as has been the case historically. 

Stevens believes that in future it will be the process of analysing client needs, identifying and delivering solutions, with ongoing reporting and reviews that will be the services customers see as most valuable. He anticipates life offices and platforms will both become more commoditised as centralised custody and nominee services as well as some element of balance sheet drivers, for those with financial strength, that will define their propositions.

Over time, he expects platform and life office pricing to become increasingly based on fixed-price, flat-rate transactional charges rather than operating on a percentage of assets although he does say that he does not believe this will happen overnight, especially in the life office market.

Personally, I agree with such an analysis. This technology rollout will be supported by a number of strategic supplier deals. The first with Prudential went live in May and SimplyBiz has already stated that it will be a launch partner for the new Zurich platform as soon as it goes live. A further five or six significant deals have yet to be announced.

In my view, this model is entirely the right approach for adviser firms looking to acquire technology support. To compete after the RDR, advisers are going to need to have access to a wide range of technology services which will cost many millions of pounds to develop. The cost of the necessary development will be far beyond all but the largest adviser firms in their own right. Support groups such as SimplyBiz can play an essential role in delivering the scale of adviser numbers to negotiate access to such software on the right terms.

One should not understate the importance of the successful delivery of projects such as this to any distribution business. Throughout the 1980s, a procession of life companies with the old direct salesforce model closed for new business, frequently after the failure about 18 months earlier of a major technology project. I expect to see the same pattern emerge among networks and support groups. Any such organisation that has not identified and deployed a full range of technology services will struggle to retain, never mind attract, members after the RDR.

Without such infrastructure, I cannot see how they will be able to manage risk effectively across their business, never mind meet the enhanced regulatory reporting requirements to demonstrate the definition and delivery of customer propositions in accordance with the RDR.

The measure of success for all such projects will be defined by their successful implementation, not just choosing the right partner and in this respect much will be determined by the extent to which adviser firms fully embrace the technology they are provided with.

In the past, too many firms have not seen the right dividend from technology deployments because they have not prioritised implementation and training. Those advisers who get the most out of this system will be those who see it as an opportunity to embrace change and new ways of working. SimplyBiz can facilitate access to the right services but it will be the extent of commitment by individual members that will ultimately define success.

Although the two companies have had a long-standing relationship, this latest move sees SimplyBiz commit to rolling out the Distribution Technology proposition to over 3,500 member advisers for both their IFA and the newly launched Sandringham Financial Partners national restricted advice business.

Stevens insists the resources advisers need will be the same if they are IFAs or restricted advisers. The firm currently has over 1,000 advisers who are significantly advanced in adopting the software. Equally, another 800 are only at an early stage.

Stevens suggests smaller firms with two to five advisers can be on-boarded to the process within a matter of four to five weeks. For larger organisations, there is more groundwork to be carried out so inevitably these take longer.

Asked what this deal means for his company’s historic relationship with Intelliflo, Stevens is quick to point out that this is still an important relationship, with approximately 1,100 member advisers using Intelliflo although he does stress that he “would like to see the Intelliflo and Distribution Technology systems working better together”.

Although I have not had an opportunity to fully explore the current Distribution Technology proposition in detail, I have been very impressed by several of the new services it has launched in recent months, especially its work around defining post-RDR propositions and adviser charging. The model behind its new iPad app looks attractive too. Based on this, I can entirely understand why SimplyBiz would make such a major commitment to them as a long-term partner.

Ian McKenna is director of Finance & Technology Research Centre

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  1. This is the first time that I have read one of Ian’s articles and fundamentally disagree with what he and Mr Stevens are saying here.

    I too believe in technology and based on what Ian and others have said went through what I can only describe as a world of pain moving my business from Simply Biz/ Intelliflo (which may be dated but it sort of worked) to true potential. True potential is much better BUT their compliance is rubbish so I stayed with simply biz who pester me to sell Verbatim and every opportunity (even our compliance officer).

    Mr Stevens says that he would like Intelliflo and DT to work together is an absolute lie and in my opinion and he will use this association to sell Verbatim at every opportunity to generate profit. A fixed price is great BUT does that mean he will sell Verbatim without and additional percentage or mark-up? If so I humbly apologise but prove I am wrong!

    All I see is a firm caught with their trousers down trying to compete with TP and failing, DT have good experience of risk assessment but absolutely none as a back office and no match for Intelliflo or True Potential.

    Any fool (even a sad old IFA like me) can see that Simply Biz will want to chuck out Intelliflo, get all their members onto DT/Verbatim and control them, I am getting wise and respect for Ken Davey will only carry you so far in this new world.

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