It is hard to imagine a financial planner's office in 2008 without some form of computer software running in it.
Many of the day-to-day back-office tasks undertaken by planners have been automated by a plethora of software solutions.
But getting all these solutions to run together to deliver a single back-office system has worked with some degree of success, mainly through consolidation of financial planning technology operators.
And integration is not the only issue facing dealer group principals when trying to achieve efficiency through software solutions.
The issue of getting planners to embrace new technology in their offices is another headache.
Capstone Financial Planning managing director Grant O’Riley said introducing new technology has been a steep learning curve for older planners.
“All advisers have been on a steep learning curve with technology,” he said.
“But we have found that the younger advisers are more technology literate and better able to cope.”
O’Riley said despite some planners struggling with technology, the increased efficiency it has brought to practices far outweighs any disadvantages.
“Technology has provided opportunities for advisers to build scaleable practices without adding extra resources,” said O’Riley.
“But in order for advisers to do this, they have had to invest the time to learn new software.
“There are practices at Capstone that have achieved significant productivity gains once they have mastered the software.”
Software mismatch
The danger for dealer groups is buying the latest systems to improve efficiency and ending up with a mismatch of software.
OLICC Technologies managing director Cliff Garrels said dealer groups have to understand what their business is trying to do before making any software decisions.
“Before putting new systems into a dealer group, the principal has to understand what the business is about and what it is trying to achieve,” he said.
“The business needs structure, accountability and transparency for systems to work successfully.”
Garrels said the systems should be about building and running a successful business and not just focusing on a piece of software to take over one aspect of the operation.
“The [financial planning] industry has been focused on writing a better [financial] plan and the software to do that, rather than running a successful business,” said Garrels.
“Now we have to focus on the back-end of the business and find systems to deliver efficiency in that area.”
Historically, platforms were originally defined as the planners back-office by handing the management of delivering client’s money to a fund manager.
Today platforms have turned into investment products and continue the focus on the front-end planning software rather than the administration systems needed to run a business.
Garrels said the back-office is about what the planner has to do to ensure their business continues servicing the needs of the client for the benefit of their practices.
“The back-office systems should be about the management of workflow and the processes to support clients,” he said.
“Therefore technology is there to help implement these systems and deliver efficiencies in the office.”
However, creating one technology solution that meets an individual dealer group’s requirements can have the reverse effect on delivering efficiency in that office.
Customised software
IRESS Market Technology senior business development executive Michael Kinens said while every planner will say their office operates differently, there are common threads between all practices.
But the difficulty comes in identifying those threads and avoiding building systems with lots of buttons to meet planners’ perceived needs.
“Every planner will tell you that their business is different and they need different settings on a piece of software to meet their needs,” Kinens said.
“We can do that, but it will need a template and that adds to the complexity of the solution we are trying to achieve.
“So it is about where you draw the line on what the system will do.”
Kinens said an example was sending an email to a client to confirm a meeting.
A planner might want the email to contain certain paragraphs that will trigger client responses to certain planning solutions.
They may want to the email to be sent to the dealer group and the paraplanner while also saving a copy in the client management system.
Kinens said that what has happened is a simple e-mail has turned into a system that will require many software actions to achieve it.
“We find the planner wants something personalised but we need to build a system that will talk about five different things,” he said.
“Planners are entrepreneurs, not operations specialists.”
Simple systems, quick solutions
Garrels said the software has to give the planner the ability to run their business and set KPIs without creating huge systems that are cumbersome to use.
“The key is the ability to deliver financial plans quickly, finding out the cost of servicing that client and how much revenue they will deliver,” said Garrels.
Garrels said the key is to keep software simple, citing the success of Apple iPods as an example of delivering a solution to match what people want.
Capstone discovered that implementing new technology into a practice did mean the dealer group had to look at the way it did things, O’Riley said.
“There is no question that an adviser can achieve productive gains from implementing software, but for a number of our practices it has been challenging,” he said.
“As well as learning the technology, to get the most out of the software some practices were forced to review their existing procedures.
“While some time has needed to be invested in learning new procedures and software, those who have persevered have seen the gains.”
The financial planning industry has for a long time pushed for a ‘one-stop’ solution to technology by integrating all the various systems.
While it seemed a good idea, integration problems between various software programs have meant many are still stand-alone programs.
Midwinter Financial Services general manager of strategy and technical services Matthew Esler said integration was not necessarily the way to go.
“There are a lot of tools out there and the industry has tried to make them all-encompassing systems,” he said.
“But these have failed because, we believe, software companies should rather stick to what they are doing best.
“So a client management specialist should build software just to do this in the same way we build software that will deliver financial planning support.”
Esler cites delivering Statements of Advice (SOAs) as an example of how the industry has been using technology that has resulted in inefficient solutions.
The industry average for producing SOAs electronically is seven-and-a-half hours, Esler said.
Yet Midwinter claims to be able to deliver a SOA in 15 minutes.
“By building planning software that promises to be all things to all people, it becomes inefficient,” Esler said.
“This is because the system becomes too difficult to use and the adviser is then wasting time. Too many financial planning software systems have been built by IT companies rather than being developed by financial planners.”
Esler said the specialist software systems should be stand alone, but obviously client data has to be transmitted between them.
“The integration of systems is about avoiding keying in the client data twice,” he said.
“It is about generating the best advice in the shortest space of time.”
Future developments
While most of the focus in recent years has been on developing better financial planning software, industry software providers agree that the future focus will be on the back-office to deliver more efficiency in running a planner’s business.
Capstone’s O’Riley wants systems to link revenue and client service.
“This would be a real benefit as it would enable practices to evaluate their cost effectiveness,” he said.
OLICC’s Garrels said his company is developing a Google-style search engine to be incorporated into a CRM system to improve a planner’s ability to segment the business.
“If I want to find all clients that are 50-years-old with certain investments, I will be able to search the system to find them,” said Garrels.
“At present I would have to go through various screens to assemble this data. OLICC is about delivering information on one screen.”
Garrels said future software development will be about building portals for the various aspects of a planner’s business.
“The future will be about building portals and the ability to access information from clients, manufacturers and advice channels,” he said.
“We envisage there being three portals — a referral portal, a manufacturing portal and a client portal — that will be next in the development chain.”
IRESS is already working on the next version of its X-Plan software, Kinens said. “The next version of X-Plan is about web-based technology and how this will sit on the desktop,” he said.
“The challenge will be [working out] what suite of features planners will want and dealing with those who hate change, which is what will happen to our software as it evolves.”
Kinens believes integration with other products and systems is the way forward, which will still be challenging.
“We will look at how information is stored and the processes of delivering that information to other users,” he said. “It will be about making the fund managers as efficient as the advisers in processing the information.” D