The next 12-18 months should see the industry move towards deals that tie up different front-end systems to create single point-of-sale solutions for intermediaries, says Ben Goss, managing director of Distribution Technology.
Existing research suggests, for example, use of asset allocation tools has increased by 100% in the past year, Goss says.
“It’s really a sign of how things are changing in the front office.”
Subsequently, Goss sees the typical use of eight or nine different front-end software products being joined up to create the single POS offering.
This does not necessarily mean consolidation will come through acquisitions.
Distribution Technology (DT) product Dynamic Planner, for example, is being integrated with Sirius Financial System’s back office solution to produce a one-stop solution primarily for customers in the big bancassurer category, such as Friends Provident and Royal Bank of Scotland – the type of IT customer with hundreds or even thousands of advisers.
Goss stresses that DT is privately owned and the owners “fully intend to keep it that way”.
The company has consistently outgrown its own business plans, Goss says, and it intends to maintain its focus for as long as it sees itself adding value to its customers’ businesses.
As part of its growth picture, the company has also just appointed Mike Clifford as operations director.
Goss says Clifford's experience in large scale IT projects from his time with National Australia Bank strengthen's DT's ability to take on bigger projects.
The industry overall is likely to keep striving towards consolidation in the IT space, because of the economies of scale that are seen deriving from such moves, he says.
Turning to the changes being wrought in the area of intermediation by business model changes and regulation, Goss says he is firmly in the camp of those who see the distinction between “advice” and “planning” as a semantic debate.
There are differences between, say, producing a 40 page financial report or a 3-5 page report including a suitability letter, but this is more a function of customer segmentation.
DT’s Dynamic Planner tool, meanwhile, will maintain its ability to configure to adviser needs across diverse areas such as muti-tie and one-on-one advice to high net worth clients.
A major challenge that could be coming up for all advisers is how to deal with allocation were long-term savings to become mandatory.
Research by GfK NOP commissioned by DT into the issue of risk profiling suggests there is a big gap between the typical use of a default fund in long-term savings schemes against the true picture of what is deemed acceptable risk by members in such schemes.
Without advice, this means hundreds of thousands, if not millions of people “will end up without the right allocation.”
Another area of challenge is in increasing use of online interaction with retail customers as part of wider use of multi-channel advice solutions.
Considering that some 15 million people in the UK use the internet for financial services already, Goss sees a need to boost use of this technology, to enable people to provide data to advisers online – essentially doing a fact-find online - coupled with follow-up telephone calls.
This would improve the level of access to advice that many need, while doing so in a more cost-effective way.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Jonathan Boyd on 020 7484 9769 or email [email protected].IFAonline
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