Time spent with clients generates revenue and secures long-term relationships, both of which add capital value to a business. This is pure commercial common sense.
The impact of regulation and the general inefficiency of the industry have forced many advisers to spend the majority of their time on non-income-generating tasks. It has reached the stage where this is the accepted working practice of many financial advice firms and unless there is a change, many adviser firms will become unviable.
This is ironic when we live in a time of economic prosperity where the need for independent financial advice could not be greater. Financial advice firms of all sizes must change the way they conduct business to concentrate on spending more time with clients.
Technology is the enabler in creating time for advice. It allows organisations to introduce efficiencies, thus freeing up time for advice. When implemented effectively, technology will have a dramatic impact in generating more revenue, streamlining processes and controlling the business.
The ability to see everything in one place, more commonly referred to as aggregation, is seen universally to be one of the most important commercial benefits of technology.
The internet and email have added a new dimension to keeping in touch with clients, who might want access to financial information at any time.
Holistic financial planning tools enable advisers to model sophisticated scenarios very quickly, contrasting an existing situation with a future objectives.
A well produced bespoke financial report, containing narrative, statistics and graphics will increase the speed of decision-making and generate revenue. Technology can produce reports in minutes, yet the client still sees it as a reflection of the time and effort that the adviser has put in.
Transacting business in personal finance remains largely paper-based but technology is changing this rapidly in the areas of pre-population and electronic transmission of application forms, policy tracking fund platforms and STP.
Advisers must look to increase recurring revenue and it is essential to monitor clients' investments and keep them informed. Fund supermarkets and wraps can lead to significant improvements to timeconsuming back-office tasks.
Streamlining and automating processes
Administration is the biggest cost to an adviser practice. When there is pressure to improve service and add value, the need to improve admin cost-efficiency is critical.
Centralised data that is accessible to everyone in the organisation is essential and ensures that data is quick to retrieve and not duplicated.
Workflow in an adviser practice can be convoluted, especially with 100 per cent case checking for compliance. Technology enables cases – with all attached documentation – to be moved electronically within an office and between locations, creating an audit trail on the way.
Technology allows admin and service processes to be managed electronically, with rules to determine the next action until a case is completed.
The most significant step in improving efficiency is e-business, where data is moved electronically between trading partners such as advisers and product providers.
Currently, real-time valuations are available from most insurers, bulk data downloads are available from all the fund platforms and many group pension providers.
Straight-through-processing of new and incremental business and electronic commission reconciliation are also gathering pace.
Managing the business
There are two angles to controlling a business – connectivity between locations of employees and data management.
Microsoft's strategy of “data anywhere, anytime on any device” is important to retail financial services, where advisers are often out of the office but need to connect to central data. Data must be available on and off line, requiring a combination of thin client (ASP) and data replication.
Data accuracy is essential to ensure that all information is reliable and is an investment and directly contributes to the value of a business. In a due-diligence exercise, if inaccurate data is produced, then it is a poor reflection of the management style of the business.
The advent of risk-profiling technology, to assess the true understanding of the client and recommend an asset allocation strategy, will play an increasingly big part in the future.
Managing accounts where fees and commission are combined will require the use of technology to match receipts, track receivables, and manage client fee and commission statements.
Measuring profitability by recording time spent on client activity, whether billable or not, provides a clear picture of how much time is spent generating income and how much income a client generates compared with the cost of the time spent on them.
We know that time spent with clients generates revenue and secures long-term relationships, both of which add capital value to a business. We also know that the impact of regulation and the general inefficiency of the industry have forced many advisers to spend the majority of their time on non-income generating tasks.
If advisers can create time for advice, this will lead to long-term success and profitability.
Technology, while being the most critical enabler, does not bring success and profit alone. This comes from setting out a clear business vision,having a client-led proposition which is effectively communicated and having sound business management to int- roduce efficiencies.
However, technology is the fundamental way to achieve these goals, together with a high level of commercial acumen. Bringing all these elements together will enable a business to create time for advice and ultimately add capital value to the business.