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The value of training

Although it may seem strange, I am rather relieved that news from Aviva’s latest retail distribution review update suggests changes to business models rather than examinations are now advisers’ primary concerns when it comes to being ready for the RDR.

As I have identified several times in this column in recent months, achieving the necessary examination status is just getting a licence to trade, it will not pay the rent. It will be crucial to firms survival to improve business efficiency. Taking greater control of client record-keeping and commissioning reconciliation will be time well spent, even for those firms that do not believe they will be able to make the transition to the new world, and there are many things that can be done to maximise the value of an existing practice in this situation. For those planning to continue after the RDR, such activity should be crucial.

There are still large numbers of adviser firms that do not operate any formal client management software. In practice, there are almost certainly at least as many firms that achieve only a fraction of the benefits they could from the investment they have already made in technology.

I often speak to firms that have a system but, due to a lack of investment in training, it has not been put it at the heart of their business. Failing to provide adequate training to staff is the biggest single reason why advisers fail to get the full benefit out of their software. I appreciate that many companies consider training expensive. In the paragraphs that follow, I will outline two widely available services which can drastically improve adviser efficiency and cut costs to an extent that should more than amply cover the cost of any training involved.

Reconciling commission payments and capturing up-to-date valuations of client investments are two processes that can now be heavily automated for the vast majority of client management software packages. If your supplier cannot offer these, it might be time to look for an alternative.

In recent years, we have reached a situation where all but a sorry handful of Luddite providers can offer real-time valuation information for client contracts at the click of a mouse. Yet while the volume of such messaging transactions has increased several-fold in the last few years, the total amount of such messages can be still measured in single-figure millions.

Given the many tens of millions of policies supposedly serviced by advisers, if client reports are being updated on a regular basis, we should now be seeing hundreds of millions of valuations in a year.

There are still some providers that suffer high error rates for these so-called contract enquiry messages but it is my understanding that other providers are achieving very low error rates, in the low single-figure percentage range. Conducting an exercise to make sure you can value all your clients’ contracts online can be a major benefit when it comes to understanding the value of your practice and segmenting different levels of customer service.

A free guide to implementing contract enquiry within adviser firms can be requested at

In the past, electronic commission payments were a privilege reserved for a handful of the biggest adviser firms but, again, virtually all providers now offer this facility to any IFA who wants to take advantage of it and all the leading client management systems have adapted their propositions to cater for such services.

Any adviser firm that pays for a software system with the ability to reconcile commission electronically but fails to use it must like wasting money.

Sadly, we do still have a number of laggards among insurers and especially fund management groups and mortgage lenders which have yet to offer these facilities.

I will be lobbying hard in the coming months to make it clear to these organisations that failing to deliver these services will put them in a potentially fatal position after the RDR.

All the indications are that delivering adviser-charging through perfect matching will be even more complicated than dealing with historic commission. There may yet be a case for naming and shaming where providers cannot demonstrate a clear plan to address these issues.

I would not recommend placing any new business with firms that have yet to deliver the core administrative servicesthat every adviser has a right to expect.

The above are just two examples of the industry services that have been built in recent years to help automate adviser businesses.

It is widely documented that organisations buying IFA businesses will significantly increase the multiple offered where clear evidence, generated from a recognised industry software package, can be provided of the extent of commission and value of clients’ policies. So, even for those planning an exit, time spent implementing the above services must be money well spent.

At the risk of stating the obvious, in these challenging economic times, it is crucial that adviser firms get the full benefit of their investment in technology.

In my experience, few firms make regular contact with their software supplier to identify the additional new services they can benefit from.
I believe a quarterly call to the supplier asking them what they have done recently to enhance their proposition and how you can take advantage of it should be an activity regularly undertaken by all firms.

I would strongly urge any adviser using a client management system that is not taking full advantage of both of the above services to call their software supplier today to find out how they can be used to cut costs and build more profitable businesses.

Ian McKenna is director of the Finance & Technology Research Centre



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There is one comment at the moment, we would love to hear your opinion too.

  1. An excellent article! are running a free online training session for advisers and their staff on Online Valuations with 1st The Exchange – 28th September at 10.15am. To register, go to:

    Additional, free practical guides are also available via and cover subjects such as:

    Choosing a back office system:

    Data Quality for Online Valuations and EDI Commission

    Understanding Error Codes (Online Valuations) :

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