In the past couple of years I have witnessed a number of distributors struggling to come to a decision over their software suppliers.  Some distributors with multi-million pound projects have switched suppliers within one to two years without putting any code live.  Other distributors have failed to find a supplier that meets their needs and have decided to build solutions in house, while a third set have embarked upon protracted decision cycles as they struggle to find a clear choice.

With distributor technology maturing and in many cases now proven, why is this decision and analysis paralysis still happening?

First, the needs and demands distributors have of technology has progressed.  Frequently distributors are now looking for and expecting an integrated whole of office solution that addresses their point of sale needs, middle office (T&C/Compliance) and their back office administration needs.  While some of the solutions on the market are claiming to provide this, the usability aspects of a sales person and an administrator are very different. Few, if any have cracked the provision a single integrated platform that not only adapts its functions to the user, but is smart enough to adapt its user interface as well.

Second, the market for adviser technology has been buoyant for the last few years.  This has led to new systems coming to market, or are just about to come to market.  These systems often promise much and so can make it difficult to choose to remain with what appears to be a less comprehensive existing solution. However, some are still unproven and may therefore come with a degree of risk that is unacceptable to many. The question is, are they a competitive threat (real and effective), or a competitive distraction?

Finally, procurement programmes will start naturally by creating a wish list of what they want from a system.  With no guidance, these wish lists can extend beyond the scope of any current system and therefore vendors struggle to meet them with existing, proven solutions.  Distributors should challenge the value and cost of delivering all their needs, but often find it difficult to objectively manage internal demands and pressure groups. We have found that by using independent domain experts it is possible to better manage the expectations of BOTH parties and so build in a pragmatic approach to what can be achieved with the most respected vendors in the market. 

The bottom line is there are lots of good systems out there that can make a real difference to the distributors’ business.  However, it is important to know what your business model is and to choose a supplier that does already or can quickly and cost effectively deliver a solution to support it. It is equally important to know if, and where it is better to amend the business model to suite the technology.

With the millions of pounds that have been spent developing a variety of Point of Sale (POS) solutions, there will be many of those who signed off the business cases and cheques that will be expecting the answer to this question to be yes! It is an interesting paradox that the pressure on designers of paper factfinds was to keep them short, yet with the design of electronic POS solutions [factfinds] and tools, there often appears to be more and more functionality/capability and complexity added without the same pressure for limitation.

Technology can ‘simplify’ what is complex, but there are occasions when something is added simply because it can! Invariably, there are competing interests and pressures in the design of such solutions and these need to be carefully managed. Should you have a ‘sales tool’ or a ‘compliance/risk management’ driven solution? Inevitably, the answer will depend on who you ask!

One company made a conscious effort to exclude ‘sales tools’ because for each sales aid, they felt that the adviser would feel obliged to use it and so need more time to complete the factfinding process. I spoke to one adviser (Wealth Manager) whose factfind was a lined A4 pad of disparate notes! While another company has tried to differentiate itself with a range of sales modelling tools that have cost a great deal of time and money to develop, as well as delay the launch timescale and associated speed to benefit. One company found that advisers were NOT using the POS with clients because it was too cumbersome and complex resulting in them losing ‘eye contact’ with the client. There answer was to consider using ‘digipens’ (an electronic pen that reads handwriting on a piece of specially designed paper), though realised PC Tablets may be a better compromise.

Some distributors simply want a ‘package’ that does 80% out of the box… suppliers will often say that their product is exactly that. However, the reality is often a mismatch of expectation or interpretation!

The danger is for people to seek tactical or ‘knee jerk’ reactions to solve some of the challenges that are evolving or that have been caused by poor planning at the early stages. What is the user community like, what do they want and how do they really work? If they can’t or don’t engage in using the solution, the investment return will be significantly undermined.

There are pros and cons to many approaches and solutions and it isn’t all doom and gloom. The answer is to make sure that you have a clear business model and process that you understand (not just think that you do). This should be well defined and described so that any POS that you design, build, buy, or customise can be properly mapped against this model so that gaps are identified and assessed for change and implications (to the software, the business model, or both). Look for flexible interaction capabilities enabling data to be obtained in different ways by different people. ‘Less may be more’ and every second counts when looking at the speed to benefit.

The next TCF deadline is looming!  From the 31^st of March all firms must have the systems in place to provide sufficient management information to check and prove that they are meeting the TCF standards.  Regardless of the March deadline, having the correct management information (MI) in place will be an essential part of moving toward the following deadline in December 2008 when firms must be able to demonstrate that they are using a wide range of quantitative and qualitative measures that they are consistently treating their customers fairly.  Having access to relevant MI will not just enable the firms to measure and guide their TCF processes, but it will also help drive cultural change.  Visibility and transparency generally reduces bad practices more quickly than other methods.  However, is the industry truly embracing the TCF changes?  On the whole yes.  But, and it is a big BUT, not everyone is on board and those that are, are often not quick enough.  Back in November the FSA were highlighting the fact that the speed of movement to TCF compliance was too slow, particularly in meeting the core principals of providing accurate, informed advice supported by sufficient customer information.  This somewhat lethargic approach has been re-confirmed in a recent survey by Mortgage Solutions which showed that with 2 months to go 24% of the 960 brokers sampled had only a vague idea of the TCF requirements with a further 3% having no idea at all! The same survey showed brokers appreciate the necessity of regulation with 44% saying it has had a positive impact on consumer perception of the industry against a mere 14% saying that it has had a negative impact.  So why is the industry slow or reticent in responding?  The technical solutions are there to help, the reward of better consumer perception and the resulting increase in trust is also there.  Alongside the positives, there is the ever present threat of punishment for non compliance too (and never been more real)… So let’s get on and do it!