AT8 have been running a set of reviews on financial planning tools in Professional Adviser over the past few months and the experience has been quite enlightening.

The number of financial planning tools available is impressive and ever growing.  This year we have already had Voyant  and IntelliFlo deliver their new tools, now 1st The Exchange and Focus have announced their intentions to follow quickly behind.

Truth from Prestwood remains the benchmark for all these companies to measure themselves against.  They have an enviable reputation and a generally very loyal and happy user base.  I personally believe this stems more from their approach to the market than their software which although very comprehensive, is now slightly old in its look and feel.  First, they treat customers with respect and are very attentive both to current and potential customers. Secondly, their training comes with the highest of reputations, covering far more than just which buttons to press to make the application work and gets to the real heart of the financial planning proposition. Third, their product is proven and trusted which counts for a lot in this industry.

So if Truth is so good why are others sniffing an opportunity?  Well, the market is growing.  RDIP is forcing many advisers to re-evaluate their business model and as more and more move towards fees, the service they deliver to justify these fees has to improve. Clearly, planning tools can help here.  In addition the FSA is pushing the importance of identifying and communicating risk better and again planning tools can play a vital role here.

I think the drivers for new entrants is more than just an increasing market. The new vendors clearly have their sights set on capturing some of the existing the Truth user base and with increased competition, cost will play an increasing a part in users decisions.  Truth starts at £195 per user per month, which can seem expensive when you consider you can get a hosted Back-office system from IntelliFlo for £125 per sales person per month.  Advisers I have spoken to are actively looking for cheaper alternatives driven by this cost issue.  In addition to this, there is an inherent inefficiency in having a financial planning system separate from the other systems an adviser may run.  This has in turn led adviser system providers like IntelliFlo, Focus and 1st – The Exchange to launch planning solutions fully integrated to their core systems. The benefits of avoiding the time overhead and potential for errors associated with a disjointed process of rekeying data from one system to another are obvious. Finally technology has moved on and there is now room for ‘innovative’ vendors to come forward with web 2.0 based solutions, as arguably Voyant have done. 

Truth are too strong to disappear and their deep understanding of the advice process provides a real service to the industry. However, they have already retrenched with the closure of their Australian operation and it will be interesting to see their response to the new entrants in the UK.

A recent article we wrote in Professional Advisor stimulated a big response. In the article we debated the benefits of using Financial Planning technology in front of the client; quoting the example of Peter Matthew of Penzance. Peter uses Voyant to analyse client information and produce a cash flow forecast and financial plan. He then plays the plan back to his clients via the computer, projected onto a large screen. He says that the effect is impressive and clients gladly pay him his fees. He therfore believes that he is adding real demonstrable value to the process of purchasing financial products – he is providing true advice.

Following the publication of the article, I was contacted by Eric Mackereth of Planlabs who raised the concern that using the technology in front of the client was potentially counter-productive. He quoted a colleague of his, from across the pond, describing the US experience thus:

“In the US, many years ago firms and the industry worked feverishly to develop point of sale face-to-face interactions but clunky technology and the changing variables that would result left many advisors being shown the door with no sale in hand. Advisors are more comfortable collecting facts at point of sale and returning with a well thought out plan. Consider one challenge, if you enter data face-to-face, both the advisor and consumer see it for the very first time together. The advisor literally loses control of the planning process and now must react swiftly in many circumstances to save face. Another challenge is the inconvenience technology poses face-to-face. The advisor has to setup, get booted up, all this takes time, valuable time to interact with the consumer in a non-intrusive way. When the computer screen is face up, in many instances it places a barrier between the advisor and consumer.”

The Planlabs position is not uncommon, indeed many advisers over the years have expressed similar concerns to me. Ultimately if an adviser is uncomfortable with using technology in front of the client then Planlabs are right and they shouldn’t do so. However, as a consumer of financial advice, I can’t shake the fact that I personnaly would like to receive the Peter Matthew’s approach to financial planning much more than a paper based approach. So I threw the question of which approach was preferrable out to a Twitter community. The response surprised me as it was unanimous – the tools are at their most effective if used in front of clients – none of the normal resistance I see from IFAs. Now this might be that as the respondents were active Twitter users, they are very comfortable using technology. However, it does show there are advisers that are going to use these technologies to the full extent and that should not be ignored.

After my informal poll on Twitter, I was then called by the Paul Etheridge who as well as being a Financial Adviser of some repute, is also the Chairman of Prestwood Software that produce ‘Truth’ (the market leader in Financial Planning Software). He had read the article and was phoning from Spain to say that he has used Financial Planning software in front of clients for years and would recommend that advisers receive the appropriate training to help them get to a level of competence that they can feel confident and competent to actively engage wit the customer, as that is where such systems are at their most powerful.

The reality is that both positions are fair, depending on the level of IT and Financial skills. I suspect different systems will support different choices of use too. Voyant and Truth are very Graphical tools,so they support the ‘in front of client’ process well. Planlabs has a very strong reporting tool, so supports the process of returning with a paper report better than some (although Truth is strong here as well). Therefore, in deciding which tools are best for advisers it is vital to consider which approach is likely to be taken when evaluating the systems, how confident you will be as a user and what approach willl support the relationship with your customer .

With pressure on traditional advertising revenue streams, firms are striving to derive income from other sources and a popular target is the internet – now, I realise this isn’t a new phenomenon, but it’s interesting to see how one of our non-financial services clients is trying to move into this area.

Classically, one major objection to display advertising is the inability to correlate expenditure to business – in these straightened times, financial directors become obsessively defensive with regard to budgets and extremely demanding that every penny spent is accountable. In this environment, our client is a very successful B2B publisher operating in a niche, technical area and found that during the latter part of 2008 and throughout 2009 advertising revenues were in decline (a common scenario). His proposition is aimed at purchasing professionals with an award-winning editorial team and now operates both in the UK, Mainland Europe and next year extends into the United States.

What should he do?

His core major clients were telling him “move digital” – it’s cheaper, cuts out your postal distribution costs and obviates the need for paper and printing. However, things were not that simple – he had spent a substantial sum on his circulation database research and has, probably, one of the most developed databases in the industry; a definite differentiator and a real benefit in terms of his proposition – simply going digital was not that easy.

So, some readership research was undertaken – what became clear from a sample taken from a readership of some 30,000 readers was interesting. Typically, the internet was used as part of initial research but everyone questioned wanted to keep a paper magazine from which to read and use as reference material – an endorsement of the value-add of the editorial approach. The answer seemed to be an integrated proposition, taking content from the paper publications and driving it into a tailor-made website – the site enables full text search on all the content that has been published, together with the opportunity to drive more newsworthy, topical items in real-time.

The site launched in early June and the experience to date has been tremendous – in the first two weeks of operation, the site has generated some 22,000 page views with advertisers and sponsors given the opportunity to acquire live leads from the site – it is this degree of accountability that advertisers find especially attractive. The other area that seems to be working is that traditional revenues are not being replaced by the move to digital – they are seen as complementary activities and so he is able to continue to offer a full spectrum of both print and digital.

Finally, as the web presence extends, it does give a springboard for further digital marketing opportunities – building a specific community, blogs and site interaction with the editorial team will be possible – a good example of sensible digital adoption.