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The new software taking on the automated advice market


This year has seen an increase in collaboration between regulators across the world. Those in Australia, Singapore and the UK have each established co-operation deals, in particular around their respective approach to financial technology.

Such arrangements should create greater consistency of regulation, which, in turn, is likely to lead to the rise of global financial advice software suppliers. This makes it more valuable than ever to keep an eye on new software news.

When it comes to seeing what is coming out of the US in this area, one conference is a must: Technology Tools for Today, also know as T3. Across two events – a general adviser show each February and its Enterprise event for large firms in November – it brings together the country’s key players.

My next column will be a summary of leading edge developments from T3. This week, however, I want to focus on the show’s most significant announcement from a UK perspective.

Finametrica is a well-known software provider, both in the UK and 20 other countries in which it operates. Unlike many of its peers, it concentrates on one key part of the process: risk profiling. Consequently, it has not launched its own automated advice tools, but is seeking to partner with complementary firms.

The first example of this strategy is a new service called miPlan Plus, in connection with Canadian cashflow planning specialist Plan Plus.

Plan Plus and Finametrica have announced they will be bringing their partnership to the UK and, from what I have seen, could make a welcome addition to our automated advice market.

Although the UK version of miPlan Plus is in its early stages, the attention to detail in the risk profiling journey is impressive. It addresses many issues the FCA sees as essential, including the risk profile relating to a specific goal, flagging inconsistent answers, and considering the user’s financial experience, understanding and capacity for loss.

The software provides extremely good feedback to the client on the likely losses they may incur at any point in time, highlighting on the chosen scenario how long the investment might grow, the length of potential downturn loss and subsequent recovery.

I particularly like the way the fact finding process uses uncomplicated language to capture client information. It is like the client telling their own story. That said, there is significantly more fact find data that would need to be captured to meet a UK regulatory standard.

The service also provides useful peripheral tools, such as a cost of delay calculator, to help the client understand the importance of doing something now. It has been built in such a way that a firm deploying the solution can configure the tool to their own assumptions and portfolios.

It also allows users to amend their goals and see the results instantly without having to go through the whole process again, unlike others in this space. It provides ongoing feedback so the client can see where they are in the plan and whether or not they are still on track to meet their goal at any given time.

There is still a significant amount of work to be done to make this something that could be used in the UK market. However, if this is achieved it could represent a powerful automated advice service with the potential to support both the accumulation and decumulation markets.

Plan Plus is clear that, in its current format, miPlan+ is designed for institutional users. It will need significant additional configuration but it would have a lot to offer asset managers or platforms that realise they need to build some automated advice capability – at the very least for their orphaned clients. Such firms should seriously think about building their own distribution and I could see miPlan+ playing a valuable role.

There are several more international cash flow planning software providers like Plan Plus (MoneyGuidePro and Advicent being just two examples) that, if they chose to enter the UK market, could seriously shake things up. This is a sector that might benefit from some heavyweight competition and it will be interesting to see if others follow.

Ian McKenna is director of the Finance & Technology Research Centre



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