The adviser technology snowball is gradually gaining momentum. This is in part due to the vast amount of column inches now devoted to setting out how portals, platforms, wraps etc will assist in developing their businesses and help with transitioning from a commission lead to a fees lead business model.
The basic premise is that if we keep telling the story, the message will eventually get through. Ultimately the message is true – technology will benefit advisers and advisers will embrace it, therefore momentum will keep on building.
Indeed, some advisers have already set sail down a particular technology solution route with great gusto – including in some cases - development of their own wrap platforms, but there is inertia amongst others.
This may of course be down to those that are just reticent about making a change – staying in their comfort zones, ‘If it ain’t broke, don’t fix it’ and all that. However, inertia may be attributed to those that are more cautious about entering into this fast moving arena.
They have read the column inches and are convinced by the message but are simply unsure of the best way to proceed. They also know that they will have to get on board soon or they are in danger of missing the boat.
One of the conundrums facing advisory firms is the question of whether using just one wrap platform will jeopardise their whole of market independence. Perhaps the answer is in the breadth of products and investments that can be accessed.
While some wraps might claim to do so, not all will, therefore this raises the spectre of advisors using a number of wrap facilities to meet different client needs. Regardless of whether one wrap or multiple wraps are used, few wraps will be able to embrace a client’s full suite of legacy products.
Then comes the conundrum of whether it is justifiable to ditch a legacy product in favour of one that can sit within the wrap. Could there be accusations of churning?
Within many technology propositions come financial planning tools, for example, to assist in asset allocation. I deliberately picked asset allocation tools as an example because it has recently been highlighted that different tools give different results.
I have no problem with that. It’s what one might expect, as there is no one right answer when it comes to asset allocation. The feedback from adviser’s echoes this with the proviso that consistency of approach is important i.e. use one asset allocation tool only.
So we arrive at a scenario where advisers may be using one or more wrap propositions plus some clients’ legacy products may be held separately on provider systems, which may not appear a favourable outcome.
The panacea is to include an aggregation layer within the technology solution. This aggregation layer can collate data from multiple wrap propositions and provider legacy systems to present a client’s overall position.
This can then be used to populate the preferred financial planning tools, enabling advisers to move forward with technology solutions with confidence such as multiple wrap propositions.
Advisers do not have to compromise between the benefits of retaining legacy products and conversion to products that can be held within a wrap. It further enables advisers to apply a consistent application of financial planning tools to a client’s total position.
Graham Coxell is business and commercial director at Capital Financial Services.
The views expressed are those of the author and not those of the company he represents.IFAonline
INDUSTRY VOICE: How can the financial services sector create good outcomes for women as both employees and customers? This was the question posed by Quilter's corporate affairs director Jane Goodland to four panellists at TISA's annual conference this...
Interest rates held
'Transfer volumes to decrease'
‘Call to action for mortgage advisers’