As a member of the Verifi team I would like to echo the comments of Mark Loosmore.  With few exceptions mortgage advisers wish to provide clients with a first rate professional service.  The current regulatory emphasis on TCF (Treating Customers Fairly) is a worthy stance but one that does require an in-depth understanding and knowledge of the client and transaction in question.  Only when an adviser is in possession of relevant and accurate information can they hope to provide appropriate and suitable advice. 

There continues to exist within the mortgage market a bewildering array of choice when recommending lenders and lending schemes. The mortgage sourcing companies provide advisers with essential tools allowing them to search these options.  However, the results and accuracy of any sourcing exercise will be based upon the information declared by the client.  In other words you can only expect to get accurate information out of a system if accurate information has first gone into it.  As we all know eligibility for many of the lending schemes promoted is strictly controlled by the clients’ credit profile and the property value.  By delivering this information to the adviser prior to undertaking the mortgage sourcing exercise Verifi enhances the advisers’ ability to find and recommend the most appropriate option available. 

There are number of tangible advantages both to the adviser and the client in undertaking this process.  Not least is the potential to speed up the advisory and application processes.  Being able to target a suitable lending scheme with the knowledge that the client will be eligible reduces the need to submit Decision in Principals and removes the possibility of case rejection by a lender following submission.  The increasing cost of application and booking fees and the non refundable nature of many means that clients could lose substantial sums of money should they fail to meet a lenders scheme requirements.  An alternative to losing fees may involve the lender cascading the client to a less appropriate and inevitably more expensive scheme which could result in long term additional cost.  Neither of these situations will engender goodwill between client and adviser and could be potentially damaging to the health of a clients bank account. 

The objective of Verifi Solutions and our application of the “Intelligent Information” concept is to deliver to advisers’ at the most relevant time information which will impact positively on their approach to a client assisting in the accuracy and quality of the advice and recommendations provided “enabling better advice”.

Money Supermarket versus Wrap…? Provider Wrap or Adviser Wrap…? DIY Wrap…? Are Aussie Wraps the answer…? A single Wrap platform or multiple providers? Wrap of Wraps? What are they, who should provide them and who should have one?

There is a lot of noise and media coverage about Wrap and the future impact it will have on the provision of financial products along with the associated advice and service. What is a Wrap anyway? There are probably as many different answers as there are opinions of what Advisers should do!

Well here’s my view… Wrap is (or should be) a ‘holistic, up to date and comprehensive view along with an ability to actively manage a client’s entire personal wealth – a personal [family] balance sheet and P&L statement with future forecasting and planning scenarios reviewed, refined and actioned regularly’. Like the role of a company Finance Director, this information about the individual [and family] is essential for an Adviser to be able to develop the strategy that supports the individual’s life- plan, to then monitor and manage performance to agreed objectives as well as deal with the inevitable unforeseen events and crisis along the way.

How does this differ from the current view of service offered by many professional intermediaries? Well, the answer is that it may not be that different; only the adviser – and client – could answer that question honestly. However, for the avoidance of doubt, it does not necessarily just mean a summary of your current Life & Pensions, Savings & Investments products. The scope of coverage is potentially huge and this is where the complexity of gathering, reporting, analysing and advising comes in. It is also why an effective Wrap needs to use a properly designed technology platform.

Typical scope would include the obvious candidates:
• Pension [types, sources, benefits and tax treatment?…]
• Protection [Term, Whole Life, Critical illness, PHI, PMI, DIS, FIB, DTA, Endowment…]
• Savings & Investments [NS&I, Endowment, Unit linked, BS, Bank, PEPs, ISAS, Unit Trusts, Investment Trusts, CFDs, OEICs, Bonds, VCT, EIS, Stocks & Shares… etc, etc, etc]

But what about:
• House [main residence, second home, BTL, property abroad, time share…] and regular revaluations
• Other assets
> Land
> Car [s]
> Boat
> Contents and valuables
• Inheritance expectation or potential [???]
• Liabilities and financing arrangements
> Mortgages
> Personal loans
> Credit cards
> Other short and long term commitments [school/University/wedding/Long term care???]
• Income

And so the list could go on.

Some, indeed many people may have a simple ‘wealth profile’, whilst others – often the ‘high net worth’ (HNW) individuals – may require a higher degree of processing horsepower (stochastic modelling) to capture analyse and advise upon their ‘profile’. The latter are invariably the target of advisers and providers alike and will undoubtedly be able to afford to pay the fees associated with the Wrap service offerings that are being created. However, these people are also very astute and will be asking questions about the relative [comparative] value that the Wrap will offer over and above their current arrangements.

Indeed, the increased complexity feeds through to the costs of creating and managing the service. The dilemma for adviser and client alike is what incremental value can be added from capturing, valuing and analysing the entire assets of the client… is this a case of the 80/20 rule? Indeed, many current offerings are primarily focused on the investment portfolio with only limited or no attention being given to other need areas.

One thing is for sure; millions of pounds has been and is being spent by the Product providers who are keen to ensure that they have a Wrap solution. Who is in the best position to create a Wrap solution [Provider or Adviser]? That depends who you ask, but it is the Providers who have the deeper pockets and it is seen as a good way to secure distribution – albeit that Advisers will be nervous of potentially being ‘locked in’ to a providers solution! Is one solution sufficient? There has been research that shows IFAs will chose more than one platform and may even have as many as 4!

Fund Supermarkets may also face competitive pressure and so try and move towards a Wrap model, though this may not be easy with their current charging methods.

There has been speculation about the suitability of foreign providers such as the Australians bringing their solutions into the UK. Whilst they have worked in their home market and may be suitable for the UK, as with so many past examples, the devil (and potential cost) is in the detail.

Technology can be used to manage much of the complexity. Current back office providers will be looking to see what elements of their solutions need to be augmented or enhanced. Some will partner and others will undoubtedly build. However, development comes at a price and the demand for functionality needs to be tested for value and strategic fit before it gets added to the product roadmap.

The power and use of technology is only just beginning to scratch the surface. Even now internet access can create a secure visual and verbal means to communicate with clients in multiple locations, including updating information, providing illustrations and ‘what if’ scenarios along with real time transactional capability. There will be those who say that technology gets in the way. Sadly this is more a reflection of attitude and some poor implementations in the past. Consumers are increasingly using technology for a range of services from banking to shopping and will increasingly expect to be able to access their financial services information in real time and carry out transactions with or without the adviser!

With the state of flux in the market, proper thought, not emotion needs to govern adviser and providers decisions alike. Competitors may use Wrap as a way of trying to approach advisers and clients, so whether you plan to have Wrap or not think about a communication strategy that is pro-active rather than defensive. As with the ‘wild west’ it was the early pioneers who got the arrows and the fast followers who got the fields! The stakes and costs are high and the strategy needs careful thought and not just a ‘me too’ philosophy. We would urge advisers and product providers alike to examine the impact that Wrap will have on their current and future business models… remember; act in haste, repent at leisure!

Joint founder and director at AT8, Mark Thelwell found out he passed his Institute of Directors exams this weekend – at first time of trying.

As Chief Operating Officer of a plc for 5 years we always knew his experience stood him in good stead on the running of organisations and now he has the exams to prove it.

Well Done Mr T!