Software offers financial planning solutions

Alexei Piltiaev explains how implementing the right software solution can help financial planning businesses tackle the compliance and administration issues flowing from the proposed Future of Financial Advice changes.

With less than 12 months until proposed Future of Financial Advice (FOFA) reforms come into effect, there isn’t a great deal of time to adapt and fine-tune your business processes for the new regime.

While many questions regarding future legislation remain unanswered, there is no doubt that financial planning businesses need to evolve and quickly adopt new technologies and the solutions they provide in order to survive and prosper under this new regime.

Part of the solution is undoubtedly found in software – which is the centrepiece for communication and interaction with clients. Efficient, cost effective and most importantly user friendly software should be paramount. Starting the evolution with software solutions, which cater to both back and front office operations, is the ideal process.

When purchasing a new software solution in preparation for FOFA, some deciding factors would be considering your business requirements now and in the future, how the software would be used, and who would use it specifically within your business.

How can software assist before and after FOFA?

One of the major changes in the FOFA reforms is the switch to a fee for service remuneration model from commission based payments. Adapting your practice to the new model may not be an easy task. 

With more emphasis being placed on the fees clients pay and the service they receive in return, the importance of tracking the services provided to the client, as well as the time spent providing these services, has never been higher. Fortunately, intelligent software can assist in a number of ways: 

1. Establish the time and costs involved in servicing existing and new clients.

With many advisers facing the question of how much to charge for advice, implementation of a software solution to help track the time spent on each client by the adviser, as well as the support staff, may provide some answers. This process may take some time getting used to but should over time provide you with a realistic and accurate pricing model for your services.

2. Standardise processes and service offerings for your client base.

Your initial efforts of timing and pricing your services will consequently allow you to standardise your processes and help establish service offerings for your client base. Having established a clear understanding of time and costs involved in providing a service to a client, a business can realistically plan for future expansion as maximum capacity to service clients with current resources will be known.

Business requirements

Before committing to any software solution it is important to factor in your current business size, its location, and future expansion plans.

For example, if a practice plans to expand into multiple offices then software with a centralised database and internet access may be exactly what is required to allow easy flow of information between locations, regardless of geographical position.

Software use

Generally every business is likely to have a number of users with varying needs. Broadly, depending on how hands-on an adviser is, they may prefer simple to use calculators and modelling tools to help illustrate a strategy or concept being conveyed to the client.

An adviser may also be interested in the business management aspects and, as such, would prefer a variety of practice management tools.

A paraplanner, however, would prefer more in-depth modelling capabilities which produce detailed illustrations of outcomes of recommended strategies. Last but not least are support staff who would most likely prefer simple data entry, reporting and easy access to client information. 

When analysing the spectrum of user requirements, it can be seen that one contradicts the other. On the one hand, a simple standalone calculator for a client meeting may be required and, on the other, an in-depth modelling tool which will allow illustrations of multiple scenarios and strategies.

Software, just like financial planning advice, needs to be suitable to a client’s needs and objectives. It is imperative that the right solution is chosen for the business.

For example ,a sole practitioner will benefit from software with a strong emphasis on Client Relationship Management (CRM) functionality and less detailed modelling features.

An adviser working alone may not have sufficient time to completely model all of the possible scenarios, but may use stand alone calculators, models and template driven tools to formulate an overall strategy.

Bigger practices employing paraplanners and multiple support staff will find a single system, covering both customer relationship management and modelling functionality, more suitable to their needs.

In the past it has been argued that as financial planning software becomes more comprehensive, complexity of its use also increases. This may be true in certain aspects, however the efficiencies achieved through a single software solution for the entire business cannot be overlooked.

For example, a good all encompassing system will only require a single data entry point, with entered information then used throughout the entire system whether for database segmentation, modelling or final advice document preparation.

This means that every staff member is at all times using the latest information available for the client and is constantly aware of all interactions with the client. A single system will also likely reduce time spent on data entry, human errors and omissions prevalent in maintaining multiple systems.

Task automation

The more complete systems will allow automation of routine tasks like marketing campaigns, templates for advice documents and regular client reviews thus greatly reducing the daily burden.

Any improvements in efficiency, provided by investment in software, will likely lead to higher capacity to take on and service new clients.

It should be noted that simply buying a financial planning application and installing it on the computer may not be enough.

Some initial investment of time and resources may be required to either adjust the system to your business process, or adjust some of your business processes to the system.

There will always be debate around the best financial planning software solutions as it is evident that the “one size fits all” approach does not apply to all business models.   

When looking to create efficiencies within your business in preparation for the new regime, it is important to acquire software which will suit your business needs now and in the future and not just because it has hundreds of features.

Alexei Piltiaev is a software trainer at Fiducian Portfolio Services.