Advice firms forced to work at fraction of their potential
Adviser firms are being forced to operate at a fraction of their potential, costing them in terms of time, resource and money, as well as affecting their service to clients, simply because of the disconnect between adviser systems, such as platforms, back-office and adviser tools.
This is the finding of a seminal piece of research, conducted by Origo and the lang cat with adviser firms up and down the country, mapping processes within advice firms, primarily across three key areas – new business, creation of annual review packs and fee reconciliations.
From closely studying firms’ processes, the research estimates that in a typical business, staff could be up to 100% more efficient, dealing with twice the assets under administration they currently manage, if the systems they used were properly integrated with one another.
Firms involved in the study on average used five standalone systems in the process of giving advice, building portfolios and managing clients; seven when platforms were added; 10 with the addition of more general systems like accounting and office software.
It showed that due to a lack of integration between systems, firms are having to plough time and money into otherwise unnecessary manual input and reconciliation. In a typical new business client journey, for example, client details were being keyed into systems at least three times.
Key facts from the research can be found on the accompanying infographic.
Anthony Rafferty, Managing Director, Origo, says: “This disconnect is a very real and significant issue for advice firms, draining their resources on a daily basis.
“It is an inefficiency and cost to the industry, which given the integration technology available to the market, need not exist. It is an issue which if addressed will see a jump in advice firm efficiency, profitability and faster and better service to their clients.”
Rafferty continues: “Our research shows that currently, despite sterling work by some of the players in the market, advice firms do not benefit from a level of integration that is of real use to them. Integrations are typically point-to-point, with one provider integrating with another, for example for valuations. They are also driven by business case, with platforms, CRMs and other system providers naturally prioritising integrations that will bring in higher levels of returns.
“However, worryingly, in our research adviser firms said that the lack of consistent and quality integrations mean they distrust the data the systems are delivering and so revert to inefficient, costly and potentially risk inducing manual processes, but over which they have more control.
“For a firm using two platforms, typically there are 23 points point-to-point integrations required, without factoring in any protection, mortgage and office general office systems. On a point-to-point basis, that level of integration is not going to happen.
“However, using a centralised hub to which platforms, CRMs and adviser software systems and tools can integrate for services pertinent to their operations, for example for valuations, bulk transaction history, transfer tracking and so on, would enable them to connect with any other provider on the hub for that service, no matter the volume of business.
“In this way, a centralised integration capability will significantly improve the market’s connectivity, helping advice firms to improve their efficiencies, their profitability and enabling them to deliver faster and better service to their clients, whilst potentially boosting business across the board.”
Mark Polson of the lang cat, says: “We knew things weren’t great before we set out to conduct this research. But even so, we were struck by the impact of these inefficiencies on adviser back offices. Even where integrations do exist, firms aren’t trusting them or using them – with good reason in some cases.
“In the online research we carried out with over 100 firms alongside our in-person visits, 85% of firms agreed or strongly agreed that lack of integration is causing serious inefficiency in their business.
“Every firm is different. But we think in many cases each administrator could cope with perhaps twice as much asset under advice as they do now, if rekeying were eliminated and the production of client review packs in particular was radically streamlined.
“There won’t be one answer for how to address this, and we love seeing system providers working on integrations in all their forms. But we do need to get on with it: clients would be horrified to see just how much inefficiency there is. Providers are generally responsive to customer demand: we think better, deeper and more reliable integrations should be at the top of every adviser’s wish list.”
- - - - - - - - - - - - - -
Download A Disconnected World: the adviser's reality >
Learn more about the Origo Integration Hub >