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New App ‘means to deliver profitable advice to lower value clients’

Distribution Technology is in the final stages of testing Dynamic Planner AccessAdviceTM, a new application aimed at helping advisers profitably deliver an automated digital advised service to lower value clients.

Speaking at the company’s annual conference chief executive Ben Goss said the application is also a means for advisers to rise to the challenges being created by digital and online services by capitalising on their trusted brand.

While the industry had been dealing with a raft of changes over the past few years, Goss said, there were “more and bigger changes coming” which adviser firms could not ignore. The primary wave of change was the rapidly growing use of digital services by consumers.

He cited the exponential growth in the use of smartphones and more importantly, the increasing willingness and comfort of consumers to research and make purchases on their phones, as perhaps the most significant trend facing traditional financial services.

“Increasingly people are using their phones to transact. On average smartphone users use their phones twice as much as people use their PCs or laptops and a third of people use their smartphones to bank online”.

Digital change had wreaked havoc in other industries – including healthcare, legal services and the travel industry, he said. “Do we think our industry will be immune to this change that is sweeping across the globe?”

Advisers responding to change

Advisers were beginning to respond to the change, Goss said, with a recent Distribution Technology survey among its adviser clients showing that 88% would like to complete at least part of the advice service through a digital process, while 38% saying they would consider adopting automated, self-serve tools over the next 12-18 months.

While most adviser firms had been actively repositioning their business models to serve the higher value client and in consequence, were actively turning down and offloading less profitable or loss making clients, and there had been a growth in DIY investing, Goss said, the evidence was that the largest consumer market consisted of people who do not want to go the DIY route and wanted someone to help them research and make decisions but were unable to afford the time or cost of a full advice service.

He cited ONS and FCA figures showing that there were around 15 million households with between £1,000 and £100,000 to invest.

“We see this as the way the industry is moving and we need to give you the tools to respond to it,” he told the audience.

AccessAdvice 1aWhat the application offers

Goss said the new software, Dynamic Planner AccessAdviceTM, is a research and recommendation tool that will enable consumers to access advice in a fully regulated environment. It gives advisers the ability to configure their own rules and offer their own recommended portfolios using Dynamic Planner’s asset and risk model to ensure ongoing suitability and WealthConnect to enable advisers to check and submit transactions and for platform integration.

He added that the automated advice will be require a fraction of the input from the adviser needed in a full advice process and can be charged at a price that provides value for the client and profitable business for the adviser firm. It can be done in the adviser firm’s brand, to their service levels, using their products and platforms.

With a typical full advice process taking four to five hours to complete and costing over £350 “it means for small case sizes profits are marginal or loss making,” Goss said. “AccessAdvice takes the four to five hour process and sucks the time and cost out of it, and makes it more profitable for advisers to serve lower value clients.”

AccessAdvice 2aIn the prototype demonstrated at the conference, Goss showed how the consumer is taken through a series of screens starting with the firm’s T&Cs and then given tools to assess their attitude to risk and capacity for loss. Information can be flowed into the advisers back office, and it is intended that portfolio tracking will be available though the company’s MyPlanning software.

Initially the service will support ISA advice but the expectation is that it will be extended to cover more complex needs in the future, Goss said.

Distribution Technology has been testing the prototype with 50 firms and is opening an early adopter programme. Goss said the company would be assessing the implications of the FCA’s FAMR report in respect of the application and would roll out the programme later in the year. Any Distribution Technology clients who wanted to be involved in the programme should get in touch, he added.

“We think AccessAdvice can make a big difference to adviser firms and to the finances of the country,” Goss said.

Adviser viewpoint

Advisers ABR spoke to at the conference said they could see the service as a useful means to offer advice to their less profitable clients currently on their client banks.

They were unsure at that time how they might extend the service to the mass market, in particular where people in that market were largely unengaged with their finances.

One adviser who worked for a firm with both an advisory and an accountancy arm, said he could see it as a useful tool to efficiently and cost effectively service the clients they were obliged to take on as referrals from the accountancy arm, which they would not otherwise accept as advised clients because of their low value.

Visit the Dynamic Planner website

Read Ben Goss’s blog: Catching the Digital Planning Wave

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