Having suggested two weeks ago that there should be an increasing market for small specialist IFA applications, to complement the major client management systems, this week I would like to look at an excellent example of such a system.
Fundsifta, is the brainchild of Les Sharpe, managing director of Esher IFA Clairville York. I am always interested to see systems that have been built by IFAs for IFAs, as there is no doubt that the best ones benefit from valuable practitioner experience in the design and delivery.
Provided the application is not too focused on an individual’s unique perspective on the marketplace, building something that is made available to other advisers can be an excellent way of firms making a service that delivers exactly what they want a reality.
That said, I think it is really important that these systems be delivered for an explicit need rather than trying to be all embracing. If somebody wants to build an entire client management system, they probably want to run a software company, not be an IFA.
Fundsifta allows advisers to quickly filter more than 40,000 funds from IMA, ABI and ICM sectors to identify those which meet an explicit set of requirements after the application of a range of different filters and then report on these against a selection of key measures. The application allows advisers to select funds based on the UK and offshore markets.
This gives the adviser the opportunity to build a range of different diverse portfolios using significantly different asset classes and understand the mix of risk metrics for each
For the UK, advisers can choose between life, pensions and investment funds as well as unit trusts and Oeics. These can be selected from the different categories as identified above or based on an individual fund manager with underlying funds being identified by name, Sedol, Isin or Mexid codes. In turn, users can select funds based on a wide range of domiciles and currencies as well as retail and institutional funds.
Having identified the universe they want to address, the adviser selects the filters to apply, including size of fund, unit type, number of holdings, initial and annual charges, when funds were first priced and performance, with the ability to choose levels of performance based over a range of time periods.
After applying the filters, the system will then generate a list of funds that meet the selected criteria. The adviser can then create a report which summarises performance, volatility, beta, alpha, sortino and information ratios.
Below the report table, a summary of definitions of each the above is provided so consumers can understand the information they are being offered.
The tabulation is presented using a red, amber, green colour coding which is explained within the definitions.
Recognising the impact that the move to digital reading has had on people’s attention spans, there are some things in particular I think can make applications really powerful. It is always good to be able to start getting meaningful information out of the system in minutes and results should ideally be displayed in ways that are clear even to a non-technical user.
Some of the finer points, such as standard deviation and sortino ratio, will be at the limits of comprehension for most consumers but even a child could recognise the message being delivered by the effective use of colour coding in the report generated. This application passes both of the above tests.
The package allows advisers to regularly analyse existing client portfolios against a range of measures and report accordingly. It is an ideal component for an ongoing advice process and could clearly form part of a client proposition after the RDR.
It also has significant value for firms which would want to construct and maintain their own panel of fund managers. Using the system for even a brief period of time identifies the stark contrast between the performance of different fund groups and particularly reinforces how few deliver value on a regular basis.
This would be a fascinating tool for advisers to have to hand when meeting with any fund managers and I would imagine that fund groups themselves would probably find it very useful to analyse their own performance in ways that build such a consumer-friendly presentation.
The risk metric analysis outlined above is just one of the features of this product. In addition, the package enables advisers to compare and contrast clients existing fund holdings with alternative solutions. This gives the adviser the opportunity to build a range of different diverse portfolios using significantly different asset classes and understand the mix of risk metrics for each.
This allows a range of analysis which is normally only available through far more expensive packages while doing so in ways that are easily understandable.
Fundsifta is available for £75 a month plus VAT (see www.fundsifta.net) and is delivered as a fully web-based application, so it is suitable for use not only with desktop and notebook PCs but also mobile devices, for example, it worked beautifully on my iPad using a wi-fi connection, although using 3G was slower than I would like.
There are some improvements that could be made, for example, integration into some of the bigger systems such as Intelliflo and Avelo, but overall this application enables advisers to deliver powerful analysis, communicated in terms which are easy for consumers to understand and is an example of the sort of simple tools that should do well in the third digital generation.
Ian McKenna is director of the Finance & Technology Research Centre