Software set to provide the missing link for financial planners

With major legislative change set to occur, it is up to software providers to make life easier for financial planners. Andrew Tsanadis discovers that the role technology and new media are playing in the financial planning industry today is unprecedented.

The push for more low-cost advice delivery models has been a central focus for financial planners over the past 12 months and this demand will get stronger as the entire industry creeps ever closer to the Future of Financial Advice (FOFA) July 1, 2013 start date. 

Improvements to financial planning software have spawned an abundance of new wealth management widgets and add-ons, providing planners with access to more efficient client data feeds, insurance quoting tools and automated statement of advice (SOA) production capabilities. 

The majority of the fully featured planning applications, however, have focused on improving and consolidating their existing functionality rather than introducing brand new features over the 2011 period, Investment Trends analyst Ian Webster said. 

Developers are focusing on delivering more efficient scaled advice delivery methods as well as solutions to better administer opt-in and fee disclosure.

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New media, including the continued expansion of social networking, has not only helped planners to develop new ways of marketing to existing and potential clients, but has allowed them to provide an enhanced planning process by living in their client’s world.

In June, Money Management reported that many financial planners were underutilising the referral benefits of their client relationship management (CRM) systems.

At the time, The Risk Store managing director Peter Wincott said planners were missing out on the opportunity to automate more business systems through CRM solutions and were not entering the relevant client data required to initiate a meaningful client relationship.

The proliferation of new technology, however, has brought with it a new challenge for professionals: the need to better consolidate these solutions in order to provide clients with a meaningful advice experience.

“Our world needs to be more single-point and we’re in a period where there’s a lot that’s new, but there’s a lot of pieces, and more and more those pieces need to be integrated,” Zurich Financial Services national manager, sales strategies and research life risk Marc Fabris said.

The industry as it stands

Along with the rest of the financial services industry, those in the software development space have experienced their own fair share of shake-up. 

In August, global financial software provider Rubik Financial completed its $23.75 million acquisition of Macquarie COIN’s institutional wealth management solutions.

Following the acquisition of CARM in 2011, former Praemium chief executive Arthur Naoumidis announced the release of the DomaCom ‘Guided Planning System’ (GPS), a re-branded version of the life-style road mapping solution called CARM GPS.

With the trial version available until the end of October, the solution is available to planners for free, funded entirely by internet advertising revenue.

“If we (DomaCom) can make a go of this model it opens up the software space to a bunch of small developers everywhere, because rather than creating a large planning solution, they can create a number of specialised widgets,” Naoumidis said.

In terms of financial planners’ needs, very few expressed concern in meeting their fiduciary requirements under a FOFA regime when compared to their desire for tools to better administer opt-in and deliver scaled advice, according to Investment Trends senior analyst Recep Peker.

Certainly technology providers are in a position to lead the way and go beyond minimum requirements, Adviser Logic chief executive Gundeep Sindhu added. 

From opt-in alert and notification templates, to enhanced client reporting tools, planners are focused on saving as much time as possible in the opt-in process.

Asgard national manager, product Kelly Power sees opt-in as a challenge to be overcome later in the software development process.

There first need to be in-built controls on the ban on asset-based fees on borrowed accounts, the removal of commissions and giving advisers the ability to identify grandfathered clients, she said.

The past year has also seen marked improvements to application interfaces and documentation preparation, largely due to the inclusion of designers in the development process, Peker said.

In addition, the number of announced and proposed tax rate changes and levies complicating modelling projections over the past year has encouraged better strategic advice support for transition to retirement services and debt recycling.

Over the last two years, Midwinter Financial Services has incorporated some eight tax settings that users can alter depending on their take of the current ruling and what will or will not be legislated in the future.

In a recent Investment Trends’ survey, 44 per cent of planners said they wanted a combined planning solution and platform offering, but the overwhelming majority were after improved uploading and downloading of pricing and client data.

Other developments include the increased speed of processing in which it now takes around six-and-a-half hours to complete a full SOA from the moment a client walks in the door, Peker said.

Iress’ XPlan software once again came up trumps in Investment Trends’ April 2012 Planner Technology Report, picked as the preferred solution by the majority of the market. (See Table 1)

Its popularity was spurred on largely by its new point and click interface, an improved function of its 2.0 upgrades. The technology provider also released support for a so-called “advice container” approach to codify best interest compliance, the report stated.

In addition, almost all of the institutions using Iress’ legacy software VisiPlan have begun to switch their programs over to XPLAN.

Reporting the fastest increase in overall satisfaction, COIN was the second-most widely used software over the year to April, with 23 per cent of planners using it as their main solution.

Respondents were particularly satisfied with the increased production speed of comprehensive financial plans, ease of use and integration with platforms, the survey revealed.

Recent additions to the solutions include a new best practice statement of advice (SOA) template, an open platform accounts module, improvements to TTR and debt recycling strategy support, and a death or divorce account-splitting feature.

In the last month, Rubik also announced the release of COIN 4.0, complete with fee disclosure monitoring enhancements and tracking solutions for opt-in.

After completing its integration with BT Wrap, Asgard’s AdviserNETgain won the highest average overall satisfaction rating, achieving particularly strong ratings for user interface, integration with platforms and production of client review reports.

Midwinter held on as a niche player in the market, continuing its position as a secondary solution for advisers seeking to offer a simple advice service.

What needs to change?

For planners, the need for better functionality is ongoing, with calls for more comprehensive client reporting tools at the top of their wish lists. 

In particular, they are demanding solutions that have the in-built functionality to pull down an entire snapshot of a client’s financial situation instantly, Peker said.

“One of the key challenges of planning software is that because it is used so much by planners, over a long period of time, they start to get a little annoyed with some of the inefficiencies,” he said.

After what he calls the six-month honeymoon period, planners’ satisfaction with their software starts to dip and right now improved usability was their main concern.

This lack of user-friendliness is the main reason CRM tools are being underutilised by advisers, Adviser Logic product manager Daniel Gara said.

If advisers struggle to use aspects of their solution, “they won’t get into the habit of making it an integral part of their day”, he said.

“If they can’t use one part of the application they are less likely to use other aspects of it.”

Iress executive general manager, wealth management – Australia & New Zealand Tizzy Vigilante said the feedback from advisers has been to keep it simple when it comes to providing a client relationship management solution.

She said a client-mapping tool that sits within Iress’ client relationship management software – ‘Client Focus’ – is a recent development that provides a graphical display of client data that can be viewed by adviser “at a quick glance”.

Advisers then have the option to “drill down into more detail if required rather than searching for data” at various levels of the data management system.

Apart from the need for improved usability, Provisio Technologies director Cameron O’Sullivan said the industry is slowly transitioning to the point where the SOA itself will become part of the point-of-sale process.

Between 85 and 95 per cent of advice generated through comprehensive models are the exact same transactions that scaled advice tends to focus on – insurance, contributions, investment advice and retirement planning, he said.

He said that through Provisio’s advice delivery solution, an adviser could deliver 90 per cent of SOAs quickly and it was only a matter of time until straight-through processing became more efficient.

“One of the things advisers are still wasting time on is the implementation of advice – what they’ll want is for their scaled advice system to have a much stronger connection with the platform, allowing them to execute really common transactions,” he said.

“No more data entry – clearly for advisers that’s a major benefit.”

Limited advice

Although high net worth clients (HNW) clients are still important to most practices, around 40 per cent of planners said they wanted to provide more single issue and transactional advice, Peker said.

“So for them, being able to implement the entire compliance process quickly and efficiently has become key, which will in turn allow them to see a higher volume of clients and produce advice at a low cost,” he said.

Improvements in lifestyle modelling solutions have largely been led by the superannuation industry, but O’Sullivan predicts institutions will be coming out with their own scaled and limited advice solutions over the next three to five years.

One of the big changes he sees coming is the development of a ‘co-browsing’ solution that incorporates such video conferencing applications as Skype and Google Hangout.

As web-based video conferencing services improve, Fabris said he envisions a world where scaled advice delivery via call centres and the web could be combined into one solution.

O’Sullivan explained that an adviser could soon have access to an interface that provides them with a range of input controls, while the client could be viewing a similar screen at their end, all within the one consultation.

Other than presenting a particular benefit for rural advisers, it will also allow planning practices to bring an added level of service to C and D clients at a comparable price to current models of limited advice delivery.

O’Sullivan did concede, however, that industry players who jumped on the scaled advice ship early – largely industry super funds – may have to adjust their offering in order to meet the requirements under the best interest duty when delivering advice via the web.

“One of the benefits of scaled advice was that you just had to focus on a client’s super fund – if all of a sudden you have to know a lot more about their personal finances, you’re starting to get dragged down doing a more comprehensive plan,” he said.

Surfing the tech wave

Apart from the expansion of mobile phone applications, tablets are fast replacing laptops as essential tools in storing and accessing client information while on the go.

They are an essential tool in enhancing the consultation process, and firms that do not support mobile technology as part of their value proposition are being left behind by the industry.

In August, IOOF unveiled its first mobile web-based fact finder for its adviser network in order to provide them with up-to-date legislation, rates and thresholds in the areas of tax, aged care, superannuation, insurance and social security.

This was preceded by the launch of Australian Financial Services’ mobile app MiAFS, which is designed to provide up-to-date dealer group and industry information to advisers.

The adviser-to-client version of the app – MiAdviser – allows both client and advisers to access client portfolios in real time, while also allowing advisers to ‘push’ relevant news and data to clients.

Although a number of the major institutions have already developed smart phone apps to better engage clients, Peker said the solutions themselves often fall short of their bells and whistles and turn into marketing tools for the business.

“Customers need to see a real benefit from using the app such as having the ability to monitor their portfolio, regular savings plan and salary sacrifice,” he said.

At the coalface, planners want access to modelling tools, fact finders and the ability to pull down basic information on a client, Rubik Financial managing director – wealth Wayne Wilson said.

Kirk Pitman, head of Macquarie Financial Planning Software, added that mobility of solutions is still at an early stage, and a large proportion of advisers believe financial services continues to be a people-driven industry.

Many planners don’t understand that the use of mobile solutions needs to be embedded into the business process because it actually changes the way they have conversations with clients, he said.

According to Vigilante, a so-called “e-filing cabinet” for clients to file important documents such as details of insured valuables can help advisers to create a lifelong relationship with their client, particularly in the event of a personal tragedy.

“As well as the obvious benefit to the client, providing this service to them means the first person clients think of when an event occurs is the adviser,” she said.

Midwinter executive director, financial planning Andrew McClelland said solutions that provide clients with online access to personal data have shown an “underwhelming” take-up, with advisers suggesting such tools are “akin to making their client’s complete homework”.

The focus should be on outputs (advice) rather than inputted data, he said.

“If you give a client access to their portfolio online, then they’ll be able to see their inputs more easily and have the propensity to update their personal data,” he said.

He added that the addition of a raft of client engagement tools can work well for efficiency but it can gradually get to the stage where the software begins to dictate the way advice delivery operates within a business.

For software providers, there is another level of uncertainty hanging over the use of digital signatures as a compliant method of meeting obligations pertaining to opt-in, fee disclosure and best interest.

Despite this, 58 per cent of planners want the capability to use electronic signatures on their smartphones or tablet apps, according to Investment Trends.

“The compliance regulations set by ASIC (Australian Securities and Investments Commission) are interpreted by dealer groups,” Humble Financial Services director Colin Williams said.

“As long as you can demonstrate that you have properly communicated with a client and the client has read and understood the material you’ve given them, I don’t see a problem with using digital signatures,” he said.

Gara said Adviser Logic was already engaged in the use of digital signatures, and as most clients already accept a fax, an email or scanned copy of an SOA, digital signatures were just the next step.

McClelland said that the non face-to-face advice works best within a scaled advice model where there is already an existing relationship with a client.

“I do have reservations regarding the quality of advice where there is no relationship between the adviser and the client and a consultation is based on a 45 minutes phone call with electronic authorisation,” he said.

Engaging with clients

Most clients have said they prefer face-to-face consultation, but a cost benefit analysis will usually drive them to access limited or do-it-yourself advice, particularly among rural and younger clients, according to Peker.

Across the software space there is a dichotomy by which advisers need to communicate a clear value proposition to clients while also allowing consumers to have an intimate understanding of the advice process.

For example, CommCentral Licensee Management released its revenue management system REVEX in order to address the need for improved transparency in the advice process.

Clients have the ability to securely access their own information while advisers can tailor the initial and ongoing process of engagement and long-term management of fees.

Moving beyond desktop solutions, Williams said social media could provide a wealth of opportunity for financial planners looking to gain a better insight of their client’s lifestyle in order to deliver a relevant service. 

LinkedIn can be a great source of strategic knowledge about a client’s professional and personal level without being intrusive, he said.

“Nine times out of 10 people update their profile because they’ve changed jobs, so it’s a great excuse to give them a call,” he said.

Planners, however, need to be hands-on when communicating online because there are dangers in outsourcing this type of work to a third party, Williams added.

“This is your voice in what is potentially a massive audience in your niche and you need to seriously consider the benefits of driving that yourself,” he said.

Following this process, advisers want the in-built capability to store all of their clients’ social profiles and “mine” them for data through the one platform, Sindhu said.

Keeping it simple in a new world

A greater number of clients want advisers to live in their world and increasingly an adviser’s professional “voice” is being heard across a growing range of media.

Financial plans need to be delivered faster, in an easily digestible format that does not trade quality for a process that is less complex for both the planner and the client.

Coming to some sort of happy medium between the two is at the very heart of every software provider’s goals in the industry.

According to McClelland, software providers have taken too much focus away from a planner’s core business, that is, to provide quality financial advice.

The FOFA and Stronger Super reforms may be front of mind for many planning practices and institutions, but most wealth management solutions are already well equipped to meet the legislative challenge.

There is such a vast array of technology at a planner’s fingertips that the real challenge comes from engaging with a client through a solution that adds meaningful value to the client relationship.