Financial technology firm Iress has launched a software in the UK it says will help reduce the cost of advice and tackle the growing advice gap.
Xplan Prime is designed to provide financial technology to IFAs, banks, mortgage advisers, high-end wealth managers and protection services that enables them to deliver objective-based and scalable advice.
Speaking to Portfolio Adviser, Iress general executive manager Mark Loosmore said: “The main purpose of this launch is to tackle the cost of advice and make it accessible. Prime enables efficient and simple advice generation with an easy to use interface via face-to-face, telephone or digital engagement with a client which pushes this hybrid advice model.
“A number of people will use this to access the wider market by reducing the fee with the help of the automated advice. I also think what it will enable is service to be delivered by mechanisms such as phone and video – again reducing cost by saving money and time to travel.”
Addressing the advice gap
A recent survey by OpenMoney revealed that there are now almost 400,000 people in what is called the “affordable advice gap”, referring to consumers who are willing to pay for advice but find it too expensive. The research suggests that up to 5.8 million people would be willing to pay for advice if it cost less.
Additionally, a survey by Octopus Investments also found that 76% of advisers viewed a hybrid financial advice model to be the future, while 81% believed the next generation of financial advisers will have to incorporate aspects of robo-advice into their offering.
Business efficiency, cost pressures and regulatory burdens
Elsewhere, research by FundsNetwork found that business efficiency was the second biggest business challenge for advisers.
Nextwealth managing director Heather Hopkins told Portfolio Adviser that advisers want their technology infrastructure to knit together better so they can spend more time advising clients.
But, CWC Research managing director Clive Waller, told PA while discussing Dynamic Planner’s link up with back office software provider Intelliflo, announced on Tuesday, that “the one-stop-shop isn’t any longer an option – people want best of breed”. “Advisers will use a stack of systems that will talk to each other without re-keying etc,” he said.
However, Loosmore disagreed. “Prime allows advisers to work with one set of documents, one set of compliance rules and one client file record ensuring consistent and accurate advice at all times, therefore doing the grunt work for the adviser,” he said.
“Advisers and financial institutions are seeking greater flexibility in how they can meet the changing needs of their clients. Prime works with Xplan as one advice platform, so there is no double entry of data.”
The software is also designed to allow advisers to tackle the increasing regulatory pressures and focus on client outcomes and suitability, which are placing heavy demands on adviser time.
“It’s a more sensible way to tackle the advice gap because the gap that is there – there is certainly a big number of people who would take advice if it were more accessible, more affordable, more efficient.
“The biggest challenge for advisers is cost of service, which links to quality of data and regulatory robust evidence of recommendations being suitable – so those three things are linked.”
Financial cuddle
Loosmore also said that while some clients require a full holistic advice proposition, others simply require goal-based financial planning, regular communication and guided advice.
“Quite often an adviser will be able to justify the advice in the first year for a client as they’re sorting the mess out but once they’ve sorted this, they need to be efficient at keeping up.
“More often than not, on the annual anniversary, it’s just reassurance for the client that they are on the right track – perhaps some tweaking. It is this financial cuddle that makes them feel good but that is harder to charge a big price for, so you’ve got to be able to deliver your ‘cuddles’ quite cheaply. And I think that’s where this automation to power the adviser to do that is so important.”
