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Thrive on technology

The survival of financial advisory firms is likely to depend on the degree to which they embrace technology.

Technology can increase productivity and profits for advisers and help advisers meet increasing regulatory demands.

Advisers should use technology to help with the whole financial planning process,from the initial disclosure of services to fact-find, through sale and writing of the business to administration.

The imminent regulation of mortgage and general insurance products gives a perfect example of the advantages of using technology. For mortgage and general insurance products, the FSA will require advisers to provide clients with an initial disclosure document and to declare the nature of their advice and how they are paid.

When selling mortgages, advisers will have to supply clients with a key facts&#39 illustration that must be accurate to within 1 per cent. The format will have to comply with FSA specifications.

Advisers selling general insurance will have to provide a statement detailing the price of the product and a policy summary although a disclosure of the amount of commission paid will not be required. They will have to supply a definition of customer needs, recommendations and the rationale for selling the product.

These regulations will add to the considerable burden. Advisers who continue to service clients using paper-based methods could see their business disadvantaged as the scale of documents continues to grow. The management of large numbers of documents and client records is easier electronically than in paper files. They can be sent to compliance departments on request by email.

The disadvantage of making all notes on paper rather than inputting information into a computer during meetings with clients is that it is more likely to lead to mistakes. By typing in handwritten notes later, an adviser, secretary or administrator may misread figures, names or other information which may require the adviser to go back to the client to check the data he has supplied. This is embarrassing and time-consuming.

If the information is not checked with the client, it may be input incorrectly. There may be a significant delay before the mistake is spotted. It can also result in product applications being sent back and delay the payment of commission.

If the desktop system keeps a record of all a firm&#39s documents, an adviser can check information on a client at the start of the meeting.

Desktop systems can drive the process of questioning that advisers need to perform as part of their fact-find. This list can be made “intelligent”, which means that advisers do not ask their clients unnecessary questions.

By taking a laptop with them to a client&#39s home, the desktop system enables advisers to print documents such as illustrations. This prevents a delay in waiting for the documents to be sent and returned through the post by ensuring they can be signed straight away.

Once the fact-find, including establishing the risk profile, has been finalised, advi-sers can use the desktop systems to search for the most appropriate products with the cheapest quote. Product comparisons can be printed during the meeting. The adviser can then proceed to making an online application while he is with the client.

Using a desktop system in this way for the planning process has advantages on different levels. Advisers who do not embrace technology will struggle to cope with narrower margins, falling profits and increased regulatory costs. On the most basic level, technology should speed up various tasks, such as cond- ucting the fact-find, providing illustrations for clients, selecting products and making applications. This creates more time to talk and sell to clients and increases an IFA firm&#39s profitability.

Advisers have to devote an ever-increasing amount of time to compliance. One way of reducing this burden is to move as far as possible towards a paperless office.

Another increasingly common feature is the growing number of misselling investigations. Advisers do not know today which products the FSA will decide to investigate in five or six years time. The problem is that six years of paper documents is a lot for advisers to store and then access quickly in the future. But documents can be stored on a desktop system or CD-Rom.

Product providers are keen for advisers to embrace technology. It is more productive for them if product applications and correspondence are sent electronically. Enhanced commission is more likely to be paid to advisers who apply for products online and commission may even be reduced for advisers who send in paper applications.

There is also a business benefit from using client data once it has been input into the desktop system. Advisers can set alerts to prompt themselves to contact a client at a future date. For example, if a client takes out a two-year fixed-rate mortgage, advisers can be prompted to go back in 22 months to arrange a new deal. It is easier to sell to existing clients than to new ones.

Desktop systems are not static products but evolve in line with requirements. Sesame Office, which will be released on October 1, will be enhanced at regular intervals after taking full account of feedback from advisers. The advantage of technology is that it can be improved and adjusted according to the needs of its users and their clients, particularly as regulation is extended.


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