How to make the most of technology at your firm

In the words of former Syco managing director Ellis Watson, who spoke at our retreat last week, 'I think if you use the right amount of technology, it can enhance your relationship to do a lot of the “back office” dumb stuff.' But just how do you do this?

In a poll at the annual New Model Adviser® conference and awards in January, a majority of delegates (37.1%) said robo-advice and the onset of DIY online investment would be the biggest threats to their businesses in the next decade.

But some IFAs also believe technological change is an opportunity, and they are changing their businesses to take advantage.

This is not just about portals and platforms. Those are now fully mainstream. Rather, these IFAs run largely paperless businesses using clever tools to make their service faster and cheaper.

But is this enough? Some experts think not. As consultant Clive Waller explains in this piece, even advisers pursuing a tech-savvy agenda are having their potential shackled by a regulator focusing on the regulation of processes, rather than outcomes.

With no foreseeable shift on that front, it is up to advisers themselves to embrace change as much as possible and show the regulator how it should be done.

In a poll at the annual New Model Adviser® conference and awards in January, a majority of delegates (37.1%) said robo-advice and the onset of DIY online investment would be the biggest threats to their businesses in the next decade.

But some IFAs also believe technological change is an opportunity, and they are changing their businesses to take advantage.

This is not just about portals and platforms. Those are now fully mainstream. Rather, these IFAs run largely paperless businesses using clever tools to make their service faster and cheaper.

But is this enough? Some experts think not. As consultant Clive Waller explains in this piece, even advisers pursuing a tech-savvy agenda are having their potential shackled by a regulator focusing on the regulation of processes, rather than outcomes.

With no foreseeable shift on that front, it is up to advisers themselves to embrace change as much as possible and show the regulator how it should be done.

The adviser view

Alan Smith, chief executive, Capital Asset Management

At the moment, we are limited in terms of what is available with regards to software in the advice market, but I think that is changing rapidly.

Businesses often get stuck in what I would call the ‘middle office’ bit, which is effectively the jobs done by a traditional paraplanner. That is the number crunching, working out of annual allowances for pension calculations, Excel spreadsheets, the data and numbers, and so on.

At the moment, there is a distinct lack of tools and digital solutions to help with that. But change is coming.

Several initiatives are coming to market pretty soon. We invested in a company called YTree, which aims to do around 80% of the work of a traditional paraplanner using algorithms. The team at YTree sat with us and were amazed by how manual our process was.

If we take on a new client, often we have to fact-find manually by writing to existing providers. We then collate that information manually and do a series of calculations to find an advice solution.

Figuring out clients’ income and expenditure can also be very laborious. Most clients do not know what they spend. But open banking will help with that, because we will have clients’ permission to go in and access all their information.

If we embrace these new developments, we estimate we can reduce the amount of time it takes to create a financial plan from 20 hours down to an hour. That creates more opportunities for client-facing time.

Everyone talks about robo-advice. But we want to carry out a blend, by using technology to do the ‘heavy lifting’ so we can shift our efforts to the softer side of relationship building. I would like to pilot these tools with clients by spring of next year. 

You can follow Alan on Twitter at the handle @AlanJLSmith.

The consultant view

Clive Waller, managing director, CWC Research

If you go back to the year 2000, an IFA’s biggest job was to get valuations from life companies. That took six to eight hours. Now I can get valuations on my iPad.

In 20 years, we have come on an incredible journey in terms of technology. To suggest it is not going to change in the next five to 10 years is stupidity.

Advisers think tactically, not strategically, because they are bombarded by an incompetent regulator that is regulating processes rather than outcomes.

What they have to understand is what will be replaced by the computer and what will not. A lot of IFAs still charge clients for fact-finding, which is ludicrous. The client might not have a document with them or still needs to find it.

In a grown-up system that information should be submitted by the client online in their own time, then put through smart software. This forms the basis of the client’s plan.

In this context, the direction of artificial intelligence (AI) is really interesting. AI will know what you want before you do. Programmes can now know what questions clients will ask and they will know what the answers should be (and quantitative computing makes most current AI look like dinosaurs).

Blockchain also has huge potential. The biggest problem in investment is arguably settlements. The quickest settlement takes around three days.

With blockchain settlements, it happens immediately; there are no custodians or transfer agents. Funds transaction network Calastone has a blockchain initiative that aims to bring the mutual funds market onto blockchain next year.

Where IFAs offer real value is in client management. That is all to do with how much the client wants to draw down and spend, or save or bequeath. It is about linking together what the client’s accountant and lawyer is telling them about their business.

Good IFAs will have curiosity and welcome change. Those that fight it will be like the 225,000 IFAs that disappeared when the securities and investment board emerged in 1986. 

You can read Clive's thoughts on platform charging here. He is tweeting at the handle @clivewaller

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