View more on these topics


I am fed up with people who keep banging on about technology being the solution to IFA problems. Technology belief represents one of the biggest threats to the future prosperity of the IFA.

The truth is that the real beneficiaries of IFA investment in technology are the product providers, not the IFA and rarely the consumer.

Product providers are using technology to drive down their costs by getting the IFA to do the work they used to do.

I believe the role of technology in the professional IFA firm is overstated. Technology works at a tactical level. If fails miserably at a strategic level. Let me give you examples of both.

Some software solutions are excellent. An IFA firm will typically have a need for a database capable of interrogation. This is difficult to do if all your client records are paper-based.

It is possible to buy a bespoke data management software system at minimal cost. The real cost is the time moving the records to the computer.

The consultants will try to sell you the “integrated package” with back and front-office functions. It will be sold on the basis it will drive down costs and make you more efficient. It will have the opposite effect – driving up your costs and changing the way you do business.

Two questions to ask if you have been sold the integrated package. First is, have I had to recruit any more admin staff since I bought the system?

I know of an IFA firm which bought into the integrated package con and now everything they do gets typed into the system. They have two and a half extra staff to process work. Their costs have gone up dramatically. They are no more efficient. They have changed their work processes to cope with the software. The second question is – have I increased the number or quality of client cases since I invested in the package?

This throws up the second failing of the integrated system. Software should support the IFA process. It is often the case that the IFA has to change its processes to fit in with the software and at no advantage.

An ideal ratio of advisory/ sales staff to admin staff should probably be 3:1 in favour of the advisory staff. If you find your ratio is lower or you have more admin staff than advisers, you may well find your use of technology is the root cause. The wrong ratio will have a negative impact on cashflow and profits.

Product providers also con the IFA into believing their intranet sites are the best source of client information, illustrations, valuations and admin changes. This is only partly true. Much of the work that IFAs do is on existing arrangements, sometimes years old. These plans are often on old systems. The providers refer to these as legacy systems. A question to ask providers here is – are all your old products available on your intranet? The answer will typically be no. This means you will still have to use the old-fashioned approach to getting this information. It will take the provider weeks to produce the information for you.

Analysis, product database software and report-writing software all have their place in delivering good advice and service to the client. There is no need for an integrated system. The best approach is to dovetail the effective technology solutions into a robust manual process.

This will leave you in control and reduce your exposure to the risk of software failure. Do not hold your breath waiting for the technology solution, it is a myth.

In 1986, I remember meetings designed to produce an application for personal pensions that would be the same for all providers. This was through something called a common trading platform. In 1994, I carried out consultancy work with a provider and a member of the team was working on the same project. Here we are in 2002 and there is still no CTP.

If technology is the answer, it must have been a strange question.

Nick Bamford is managing director of Informed Choice


NDF Administration – NDF Selector Income & Growth Plan 2

Friday, 15 November 2002 Type: Guaranteed equity bond Aim: Income or growth linked to the performance of the FTSE 100 or the Dow Jones Eurostoxx 50 indices Minimum-maximum investment: £10,000-£1m, Isa minimum £7,000 Term: Option 1 – three years two months, option 2 – four years, option 3 – five years six months, option 4 […]

&#39Emergency measures by FSA have had little PI impact&#39

The FSA&#39s temporary professional indemnity insurance modifications have failed to have any significant impact in helping IFAs get cover, according to leading PI brokers. Although the modifications, announced last month and due to run until July, are considered to be a step in the right direction, brokers claim the changes came too late to help […]

Independent view

Common sense has prevailed and the FSA has announced that the menu approach for paying for financial advice is to be adopted instead of the defined-payment system. This will help to preserve the vital role of IFAs in the UK and maintain consumer choice. What I would like to see is a less prescriptive approach […]

&#39Advice is needed in buying an annuity&#39

Most people who buy annuities do not understand them and should have to get basic advice before buying one, says Downing Street policy adviser Dr Ros Altmann. She says people on low incomes are losing out on annuities and she is calling for a basic level of mandatory advice covering product structure and rates at […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm