BBC's Panorama highlights the industry's greatest challenge

BBC's Panorama highlights the industry's greatest challenge

FSA writes to wealth manager CEO's

Last night's Panorama programme - 'Can you trust your bank' provided ample evidence that, in their words "Investors' attitude to risk is the most important thing for banks to get right". While the spotlight was turned on banks, it is clear that the issues raised touch the whole of the retail wealth management industry. The FSA today wrote to CEO's of wealth management firms focusing on exactly this.

Panorama brought to life in the way that only TV can the difficulty ordinary consumers have in articulating what they want from their savings and how advisers' often struggle to explain risk. It was hard to argue with their conclusion that risk profiling is not well explained and often confusing particularly to savers and investors with low levels of experience. As one retiree put it when asked whether he made the type of investment he wanted clear; "I certainly didn't make the point clear on the type of investment I wanted, only that I wanted to be able to draw interest off the money. I don't go to the doctors and say, can you give me a lethal disease, I don't go to the bank and say, can you lose me all my money." Two years later the value of his investment had halved.

Bridging the gap between a customer's appetite for, and capacity to take on, risk and the products on sale is the greatest challenge faced by the retail wealth industry today - get it right and we help customers achieve their goals and ambitions - get it wrong and the customer can be condemned to years of heartache and potentially retirement in poverty - right at the point in their lives where they have no opportunity to correct it.

At DT we are committed to ensuring our clients have the best tools available in the industry to bridge that gap. Last month we went to the Plain English Campaign and had our risk profile descriptors Crystal Mark approved to ensure that when clients use Dynamic Planner, the language is as helpful and clear as possible. Our Fund Risk Profiling service helps fund managers articulate the likely risks inherent in their products and link these on a consistent basis with customer risk profiles so that they can be recommended with confidence. We believe that only by establishing both the customer's and the product's risk profile can organisations and advisers truly bridge this critical gap in our industry.

Today's FSA "Dear CEO letter" to the heads of wealth management firms says that 14 out of 16 firms reviewed were judged to pose a high or medium-high risk of detriment to their customers. Why? Reasons included inadequate risk profiling and inconsistencies between the portfolios and the client's attitude to risk.

Ben Goss - CEO

Leaders views on technology in advisory businesses

At the end of last year we carried out a survey of business leaders in 45 of the top advisory firms; regionals, nationals and networks, banks and wealth managers. We asked a series of questions about how they viewed the role of technology as both blocker and enabler... You can find the results here .

The importance of independence

Prompted by two events in the last two weeks, the FSA's paper CP10/29 and Standard Life's acquisition of Focus Solutions it's worth considering the importance of independence and objectivity in the provision of front office and financial planning tools.

For advisers. In the words of the FSA in CP10/29 “It remains … important that an adviser carefully considers the objectivity of any tools provided as they are responsible for the advice provided to the client.” As the UK’s leading provider of financial planning tools and front office technology, DT’s reputation and success has been built on our ability to deliver high quality, objective solutions. We won 16 PPP ratings in the F&TRC's recent evaluation of financial planning tool suppliers, more than any other supplier. We feel it is important that our clients and the advisers that use Dynamic Planner can trust the objectivity of the tools they use. This has been the case since founding the business in 2003 and certainly the case when the FSA itself used our technology back in 2004. Our plans as a company, board and management team are to continue to build DT and our products, successfully and independently, supporting high quality, objective financial planning, sales and servicing to the benefit of our clients.

For financial services companies. Independence is not just important from the advisers' point of view. Our clients need to know that they will have a strong voice at the table in helping set DT's product road map and priorities. As an independent and privately owned company we pride ourselves on our ability to put our clients' needs first. At the end of each month for example we complete a 'health check' asking each client on a scale of 0 to 10 would they recommend us? Over the last 8 months since starting this I am delighted to say that this Net Promoter score has moved up and up as we have focused more and more on this measure of client success. For November we scored an average of 7.8. We understand that all financial services companies are facing great challenges (as well as opportunities) in the transition to RDR and we are working with clients from across the industry to deliver powerful and innovative solutions that will help them grow and succeed beyond 2013. We are very excited by the product releases we have planned for 2011 from our forthcoming Winter release in January onwards.

For platforms and providers. Lastly as an independent supplier our programme of integrations with leading platforms and providers will mean that we can support our advisory clients with integrations to a platform of their choice. We know that leading advisory businesses want best of breed when it comes to their front office and investment platform combination and DT's programme will mean that our clients can have exactly this.

Ben

RDR and practical support for advisers

It is quite common these days to read in the press that implementing the RDR will rely on the improved use of technology. One good example is Richard Mein's article in Professional Adviser published on 18 November.

Assuming that technology is a "given" , what advisory businesses could really do with now is some practical help as what they could do to assist with their RDR transition preparations. For example, if you want to segment your customers and develop specific service propositions for them, which segments do you choose, what do those propositions look like and how much might they cost?

We've been considering these issues at Distribution Technology and we've come up with some ideas. We've put together some suggested propositions for a variety of target customer segments, from the mass matket to the ultra high net worth. We'll be publishing this as a white paper next month and we're giving you advanced notice to reserve your copy. To find out more about 'sharing the problem', please contact us.

Shelley Robertson
Marketing Manager

Autumn preparation for RDR

Dynamic Planner's autumn release is now live and helping advisory businesses plan, sell and service their customers even more successfully ahead of RDR.


We have extended our award winning financial planning tool set with a powerful new pensions consolidation tool (more on this in the next few weeks) and our first valuations integration with Ascentric the whole of market wrap. We have also added new easy-to-use wizards to aid customer set up, workflow and fact finding.

Financial Adviser recently ran an article on Chartwell's use of Dynamic Planner over the phone to service those customers where it was proving unprofitable to support them face to face. In combination with the Ascentric integration Chartwell advisers are able to provide plan, sell and service their customers using a single easy-to-use application - ideal preparation for RDR.

Shelley Robertson
Marketing Manager

Platform award and target operating models

We received "Highly Commended" as the "Leading platform users' planning tool provider" at Tuesday night's Aberdeen Platform Awards, coming second to Financial Express Analytics. Congratulations to the DT team and thank you to our clients. Congratulations of course to Finex too. As Finex are a partner, it's good to know we really are offering our clients, best of breed.

The judges based our commendation on the basis that DT offered the "best end-to-end solution" for the front office. From conversations on the night, it's clear that "front office" is becoming established as a category in its own right,  as well as being an integral part of the Target Operating Model of choice for advisory firms ahead of RDR (Front Office + Investment Platform(s) = Target Operating Model).

Ben

Process, process, process

At a recent user group the topic of FSA ARROW visits came up and the Regulator's apparent focus on the need for repeatable processes across an advisory business as part of the TCF agenda.

The FSA's move away from 'light-touch' to a new outcomes-focused approach delivered through intensive supervision is clear. They have hired 537 extra staff to make extra supervisory visits.

Ensuring that all front office processes used to deliver planning, sales and servicing are consistent and managed centrally means that the firm is better placed to manage outcomes and treat customers fairly. In preparation for RDR it also means that the operating model is more efficient.

Advisers of course are very often used to doing their own thing when it comes to advice. There is also a potentially risky mix of paper, spreadsheets, home grown tools and back office systems which inhibit the delivery of consistent processes and introduce the potential for error and misunderstanding.

So how do you introduce consistent processes without upsetting half of your advisers? Answer: Carefully. We have seen it done well and not so well.

What clearly works is the introduction of processes which obviously help the adviser; that make their lives easier. One client who has been particularly successful in this regard says that they need to make it a ‘no brainer’ for the adviser to use technology. They provide ‘bite sized’ processes using Dynamic Planner (we call them ‘tasks’) which together build into a single customer view and financial plan which can then be managed on an ongoing basis. It’s easy for the adviser and delivers a better customer experience.

Think of it as a ladder. Risk profiling or a simple investment sale is a great place to start as the bottom rung and provides a base on which fuller investment advice or more holistic planning can be built. Once the client data is entered into a front office application of course, it makes it considerably easier for the adviser to undertake the next, more comprehensive advice task or review.