In this series of articles, I will discuss how adviser firms can maximise the potential in their existing technology investment by implementing a well-executed digital strategy. The aim is to simplify existing processes, reducing their complexity and cost, remove paper altogether and allow advisers to manage more clients leading to both increased profitability for the adviser and extending advice to clients who cannot currently afford it.
Many adviser firms we talk to, have this strategy:
- Current back office on Intelliflo, Adviser Office, CURO, X-Plan, Focus and less frequently Enable, Plum or JCS.
- Many firms have issues with the reliability of their data in the back office. Not because of system problems, just because it’s a nightmare to keep the back office up to date.
- Most are using a current preferred platform for new clients but have a number of previously used platforms which have client money and are still attracting new business from existing clients. They often have a project plan to migrate existing clients on to the new platform.
- Most have dabbled with online client access by giving clients access to their chosen platform. Not normally that successful as clients can only see the assets on the platform, not their overall wealth and gives rise to a training issue when moving clients from one platform to another.
- Some have dabbled with a portal from their back-office supplier but there’s generally concern with the user experience of the portal and especially the reliability of the data.
- Most are either looking to move back office or platform and in some cases both and have a strategy in place to clean up the back-office data which has been a priority for a number of years.
Before you move system or embark on another data cleansing exercise, I’d urge you to read the following articles which will lead you step by step through to a path of enhancing your platform and provider relationships and significantly increasing the efficiency and use of your back office. This can be done without moving system although this may be a step you undertake if your back office is fundamentally not suitable for your firm. I’ll talk you through this process and it becomes very much easier if you do things in the right order. But before we go any further, it is worth going back to basics and considering what constitutes great technology.
Let’s begin by highlighting the difference between technology (hardware) and applications (software). Examples of great technology are computers, laptops, the web, mobile phones, GPS etc. These technologies are useless until software applications ‘disrupt’ the status quo by taking the technology and improving an existing process so that you quickly forgot the way it was before.
Examples of software disruption, are the spreadsheet (VisiCalc) which changed the way we do book-keeping and word processors (WordPerfect), which replaced the typewriter.
More recently Satnav using GPS tracking has pretty much replaced maps. Disruptive technology isn’t new but the speed of change is increasing and well-executed examples of disruption such as Amazon, Facebook, Twitter, Airbnb and Uber change our lives and we can’t go back.
I started this series of articles at my villa, in Menorca. I was working and holidaying combined, in the same way that we no longer retire, why do we need to demarcate between working and being on holiday? It’s a bit windy for my boat, but in two days’ time the winds dropping. I’ll take it out, using satellite mapping to keep me away from the rocks and let me know where I can safely anchor. To get my skippers course, I had to learn how to chart- read, plot a course taking account of magnetic and true north, wind and tides. Now I look at the weather forecast on my phone and off I go.
We could hold on to the notion, that things were better before recent mobile technology innovations but blink and you’ve been replaced by a better process. Given how easy things have become in most areas of our lives, it would be a very foolish person, that was prepared to say that technology won’t disrupt financial services and indeed if you’re over thirty and been in financial services more than ten years you’ve already been disrupted, you just might not have noticed the change.
I entered financial advice in the 1980’s. The PC was a very new idea at the time. My first job was as a computer operator for a financial adviser firm. I had to check the FT every morning and enter stock-prices into an Apple II computer, which could then print out a valuation for clients. If the plan had regular premiums then I would ring the life office (often reversing the charge) to get the number of units. The first disruptive technology I came across was the introduction of price feed technology from Prestel. Using screen-scrape software Teletext could be used to provide an automatic feed of prices negating the need to read the FT. My job had been replaced by technology. This tech is still used today and Financial Express and Morningstar are the best-known providers.
More recently, platforms have significantly disrupted fund management companies and providers. Why buy an ISA from a fund manager when you can buy one from a platform and get access to virtually every fund manager. What’s more, you no longer need to ring and get a unit holding update as platforms helped bring about data downloads into adviser back-office systems, finally replacing the other part of my first job.
But perhaps, the most disruptive technology for advisers has been the introduction of the back-office system. These have disrupted the filing cabinet, typewriter, post-it-note and spreadsheet to provide a single unified way of tracking the work within an adviser business. They integrate with providers, platforms and price feeds to automate valuations making the quarterly report easier. They use Microsoft office to automate letter writing and store the correspondence against the client account. Tracking fees, commission payments and third-party payaways to keep track of income. It would be very hard to comply without a good back-office system.
Back-office and platforms were the early disruptors in adviser FinTech but times have changed and it’s time to bring your adviser business into the 21st Century.
In the same way, back-office systems were going to be replaced by platforms but it turns out they are very complimentary making the back-office work more efficiently. The next adviser FinTech disruptor, the client portal, completes the circle bringing the client into the process which was started by the back-office, improved by the platform and will be perfected by the portal.
In my next article, I will explore the back-office in more detail and what they do well. This will give you the things to look out for if you are considering moving back-office.