Adviser CIPs ripe for disruption - the lang cat

The free-to-download paper, which was commissioned by back office provider Intelliflo and surveyed the views of 110 financial advisers, found two thirds of advisers were generally looking to develop their CIPs - whether through deeper technology integration or using different technology for different client types.

In terms of overall disruption to CIPs in the market, the lang cat expected such change to most likely come from the investment solution and platforms, rather than advisers themselves, as per the below diagram.

Although the lang cat believes adviser pricing disruption is less likely to happen, the firm reckoned would have the biggest impact in the value chain.

On average, the lang cat found CIPs cost clients a total 2.28%, including the investment solution, investment management, platform and advice fees. In the next five years - accounting for the potential cost savings throughout the value chain - its prediction for an average cost post-disruption came to 1.55% - a total saving of 73bps for the end client.

Again, in terms of the likelihood that the proposition itself will see disruption, the lang cat believed it was more likely to happen at the investment solution and platform level.

The lang cat founder Mark Polson said: "While it's easy to think of a CIP as a portfolio, or a multi-asset proposition, it is really the fundamental proposition an advice firm offers its long-term savings and investment clients. When implemented well, a CIP delivers consistency of advice, a more efficient business operating model and, most importantly, superior client outcomes. Although many firms have been running successful propositions for a number of years, MiFID II has significantly increased the time advisers spend running their CIP, impacting business efficiency."

Intelliflo CEO Nick Eatock added: "From the lang cat research, it is clear that obtaining client authorisations and complying with MiFID II disclosure requirements is adding considerable extra work to ongoing portfolio maintenance. Putting technology at the centre of the CIP process and integrating the research and planning tools, investment management and the platform with each other and the back-office system can improve adviser efficiency and reduce risk while improving the experience and outcomes for the client and saving them money as well."

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