With Meaningful Money, he is pushing the boundaries away from the traditional brochureware site of many IFA practices with the quite brilliant and engaging use of video. Meaningful Money is in effect a library of video blogs about financial issues. In the videos, Pete gives his personal insights into how to manage finances and investments, how to plan for retirement and how to financial insure against various scenarios.

His videos cover the core principals of Financial planning, building the foundations of the financial plan, investments and risk management and general topical financial discussions. The videos are delivered in an engaging format, with Peter talking to the camera as he moves around the county. The style builds rapport and relationship (you feel you know Peter well after the first video) before the client has even met Peter.

The boldness in this approach is that it could enable clients to become more financial astute and to selfserve, convincing themselves that they don’t need financial advice. However, the hard truth is that for some clients, this may be the right thing to do and they may not be in the position to justify Pete’s fees yet (when they can I wouldn’t mind betting Peter is on the list of people to contact). The reality though for many clients is that they will realise the complexity of their financial situation and Peter is then ideally placed to help them.

The reach of Meaningful Money is of course is far wider than the Cornish boarders and Pete’s services through the use of technology are now also stretching their reach throughout the UK. Through the use of Skype Video he can contact clients easily and recreate some of the personal chemistry associated with face to face advice but without the cost and time of travelling to remote clients.

Meaningful Money is one of the most unusual and differentiated IFA websites we have seen and we recommend a review of its capability.

On one slide (of too many) that was part of the presentation about the market challenges – including the global and local economy and regulation (RDR etc) – I listed a number of bullet points to illustrate the economic environment:

My point was that it is too often too easy to focus on the negatives and see the ‘glass as half-empty’ (some see it as completely empty!). I gave a personal example of how we need to put problems and challenges in context – without ignoring them for what they are. I was relating a story about the challenges of having a daughter about to do ‘A’ levels and the pressure that I was placing on her to study in order to get the grades required by her University offer (I am apparently more of a ‘stress transferor’ than a stress owner). All of this paled into insignificance (well not quite…), when, after a week of racing heart rate (tachycardic) and two occasions when she collapsed, she was eventually rushed into hospital with what turned out to be ‘massive bilateral pulmonary emboli’ (two big blood clots on both lungs) that were causing significant strain on the heart and required urgent thrombolysis. My daughter has become a bit of a phenomenon due to the rarity of the problem in someone so young without obvious linking causes, but I am sure she would prefer not to have this notoriety.

The good news is that the advice and treatment by the experts seems to have worked and although still recovering with ongoing medication, the current status is less critical and worrying than three weeks ago. The point is that however difficult the situation, there is usually a way of dealing with it and in the context of other situations it may not be as bad as we first feel.

Going back to the presentation and the bullets on the various slides, we should remember that our industry often has the knowledge, skill and experience (and products) that can help consumers to manage or mitigate some of the consequences of the problems that the economy presents. We should be proud of what we do and positive about the value we create. As I said (not original) last week, ‘the only constant is change’! Our industry needs not only to cope with change, it needs to be resourceful and adaptable in order to ‘create positive change’.

1st – The Exchange used the conference to trail a number of interesting developments. The one that gained the most interest was their ‘Client Portal’ and it is an important development for a company that has largely delivered offline technology solutions in the past. The Client Portal quite simply gives the end client a view of the data the IFA holds. It also enables the client to make changes to that data albeit that these changes, for data integrity reasons, aren’t accepted into Adviser Office until approved by the adviser. Client Portal also shows a view of the Portfolio, enabling automated valuations to be requested. Finally, it allows for a secure document store and a protected method of communication between adviser and client.

1st – The Exchange has built the system with mobile devices in mind and demonstrated this with both the iPhone and the Blackberry. Client Portal is a significant development and a positive step forward with a more modern web look and feel when compared to Adviser Office. There is a breed of more modern tools that are being used to engage the end consumer in a number of ways and another good example of such a tool from Sammedia which has a very engaging ‘Apple’ look and feel to it, called MoneyInfo was also on show at the conference.

In addition to the Client Portal, 1st – The Exchange was also showing of its new financial planning tools to the market. Again, what they have built, is an impressive step forward over some of the older, but still widely used Product solutions. Financial planning tools tightly integrated to the back-office makes a lot of sense and my only disappointment with the tools that were on show is that they are probably still six months from general release.

1st –The Exchange is the largest ‘quote and apply’ portal and is still the largest back-office system in the market. As market leader, they are often picked on as the firm people love to hate. However, the value that they provide to the industry has been and still is, immense. The company has a broad set of product functionality and the financial backing to push its strategy forward. It spends more on R&D than some of the smaller companies’ annual turnover. As with all suppliers, clients and consultants like ourselves often want more to be delivered from them sooner and for everything to work as a joined up story. However, we mustn’t lose sight that ‘Rome wasn’t built in a day’ and maintaining existing functionality, renewing it in new solutions and adding innovative ideas for the future is a significant challenge, but is one that the Company would appear to be working towards delivering.

Having worked in Financial Services for many years with roles in Sales & Marketing and Regulation, I have witnessed a remorseless increase in the attempts to control the risks of inappropriate advice being given to the consumer. I applaud the principle and much of the effort, but I also share the frustration of constantly being expected to create and keep the mountain of documentation/data records that show that the right procedures and outcomes have been applied. The reason that the regulation has continued to grow is twofold – first, regulators rarely propose a reduction in regulation (especially if it is their career) and second, we have suffered with ongoing evidence that bad practice continues. Indeed, even where people follow the rules, some have done so as a sop and found ways to gain at the expense of the consumers best interests.

A major bank has had its sales practices exposed by a leaked document showing how they ‘incentivise’ (or pressurise) staff to sell riskier product choices with greater points value or commission to influence performance. The headlines do not reflect well on the bank themselves, but they also tarnish other Financial Institutions and the Financial Planning market generally. Consumers should be able to trust all advisers and can find it difficult to distinguish good from bad. However, it is made worse when the corporate culture of what should be a respected brand is driving the policy and expectations of adviser behaviour in negative ways. The bank claims that its processes adhere to the regulations and that they would assess the client’s needs along with attitude to risk etc before recommending a product. Whilst they probably do, it is also the case that skewing the rewards to offer more for one product recommendation than another is likely to drive behaviour towards a particular outcome.
Perhaps RDR will address such policies and behaviour, but if people are intent on finding ways around rules and/or choose to ignore risk, there is no absolute guarantee that consumers will be protected.

In one of my previous roles as a director of a Plc, one of the things that became a priority after we floated the company on the Stock Exchange was ensuring that we were aware of and complied with Corporate Governance standards. Most of the Combined Code is common sense, though it is interesting how many times large Corporations selectively ignore some of the standards if they don’t suite their company or personal goals. Alongside our ‘formalised’ application of the Code, we also took out Directors and Officers Liability Insurance. At the time, I didn’t even consider not doing so. However, it got me thinking about why I should feel the need to ‘insure’ the risk that my behaviour might not be up to scratch and another question that came to mind was why was it right that the Shareholders should pay for such insurance (as with most companies, it was a business expense). Ultimately, in extreme cases, we have seen some Criminal Prosecutions of Directors, but as with the dagger in the steering wheel, maybe one way of ensuring that Directors retain a focus on their own ‘moral compass’ is by not offering them protection funded by the shareholder (or maybe we should ask why they need it at all). Regulation can and does offer a degree of security and protection, insurance can provide some security in the event of failure. However, knowing what is right and wrong and applying that for the good of the consumer should severely reduce if not remove the need for such arrangements.

I was one of the first people to use internet banking when Barclays moved from their PC banking application quite some years ago. As with e-mail, my love of electronic activity is borne from an inherent laziness on my part as I hated the old paper processes that took too much time and effort (‘every second counts’ as one of my hero’s Lance Armstrong would say!).

With my old internet banking process, I had my account number, a membership number, an ID number and password – a similar approach taken by many other online banking, credit card and savings companies since (to varying degrees, some still do today). However, Barclays decided to introduce the ‘pinsentry’ – a calculator-sized piece of hardware that is more suitable to Companies that do online banking – others have followed this trend. The effect on me was to reduce the number of times I access my account and to make the process of carrying out transactions, especially new payments, a real pain! Apparently, Barclay has won some security awards for their system and probably feel pleased with their decision. However, this needs to be considered in the context of customer accessibility and usability as well as security.

I am not advocating a disregard for security and I would not want to have to pick up the bill for some cyber thief clearing my bank account. In fact, when I decided to write this blog, I felt somewhat awkward at raising questions about security when I am also an advocate of protection (my past regulator experience competing with my anti-authoritarian maverick characteristics!). However, I do object to having to put up with inconvenience and cost due to criminal activity in the same way as I object to having to pay for car or burglar alarms. Apparently, criminals carry out relatively small transactions as larger size payments used to draw more attention. The problem appears to be that a set of ‘rules’ automatically detect – AND AUTOMATICALLY BLOCK – ‘suspicious’ transactions, often below £1,000. Perversely, whilst banks try to stop such thefts, they apparently do little to pursue convictions as they are not economical to do so.

In the last 12 months, we have seen personal queries and company queries increase and while this may be the price we have to pay for e-business, it cannot be right that the process is so disruptive! Examples of personal and company queries show that when the ‘fraud/security’ rules trigger a query, they now seem to use a text, or voicemail validation asking several questions to ascertain if the transaction that they have just STOPPED is legitimate. I am happy with the use of technology in this way, but at the end of the process, one may assume that the confirmation that you have just carried out results in a satisfactory ‘clearance for payment’… Sadly it doesn’t!! What you seem to have to do – because ‘that’s the way the system works sir’ – is to restart the whole electronic process and payment again (and hope the retailer/merchant has not blocked you as a ‘poor’ prospect). What this says is that the bank has protected itself and will ostensibly claim to have protected the customer, but the fact that they do not (and claim they cannot) restart the transaction for clearance shows that they are focused on their own interests and not the customer.

The pendulum swinging to greater protection is in danger of making it impractical if not impossible to do business online without having to phone the bank or card company beforehand to tell them that you are going to spend some of your money. However, even making the call is not guranteed to head-off the potential rejection as we found out with Santander just this week. When we phoned to say that a payment would be made for IT equipment with a supplier that was recently caught by the security rules of ‘suspicion’, we were told that ‘the system’ may still reject the payment if the security rules were triggered and the filenote would not necessarily stop the automated procedure. In order to access cash machines and make payments on holiday, it is now common practice [requirement] for custiomers to have to notify banks if you are going abroad (something I used to do anyway).

I personally, and we as a Company, take our banking and credit rating activities very seriously (I pay for the use of several Credit agency ID and credit alert systems). With the planned removal of cheques and reliance on electronic transaction methods, it is important that banks and other companies look at how they implement security in a way that makes it impossible or inconvenient to the criminal, not the customer. The experience of the way systems appear to have been designed to-date, seems have ignored the disruption to the customer and be oblivious to the feeling of embarrassment when ‘security rules’ block payments making it look like you have a problem. I suspect that the electronic validation technology has been tested to a degree, but how much testing has been done on the personal impact these systems have remains much less clear. Despite having complained about the experience at Santander (and received compensation), they say that they cannot [will not] change the system!

E-business is a great asset to our modern world and is breaking down barriers to new geographies and markets that would have been inaccessible or uneconomic in the past. We must be sure that the systems and processes are our servant not our master. Convenience and security need to be managed in partnership with the customer at the centre, otherwise the barriers of ‘protection’ will stop the benefits being realised for all.

* The top distributors have woken up to the benefits in technology and are investing heavily to support their businesses
* The networks are moving to a model of part mandatory use of technology (usually around the submission of business)
* The networks are aligning themselves with particular IT vendors – IntelliFlo, Focus, Distribution Technology and 1st – The Exchange are winning these battles
* The Smaller distributors use a wide variety of technologies and are gaining real business benefits: IntelliFlo and 1st – The Exchange are doing well in this sector, as are Plum and Bluecoat Software
* Product and Fund research tools are also gaining a strong presence with Morningstar, Synaptic, OBSR and Defaqto being most frequently cited
* FinQS’s TCF centre is gain traction in supporting both the smaller IFAs and the networks

During the case studies we covered many different business models and lots of different uses of IT. It has become clear that despite the predictions of doom after 2012, parts of the distributor market are resilient and many are now preparing and will be ready for RDR. Our interviews were however with the leaders in the industry and we are well aware of the horror stories about how many distributors aren’t doing the necessary preparation for RDR. Indeed a recent moneysupermarket.com survey claimed 18% of IFAs were waiting until 2012 to start changing to become RDR compliant.

Hopefully our articles will encourage some of these to change their mind and use technology to re-engineer their business now, so they can start reaping the benefits now and not wait for 2012.

The big companies have deep pockets and can, if they choose, weather difficult market conditions. They also have access to wider resource pools to help on big deliveries and have the ability to pour substantial R&D budgets into new solutions. The benefits are significant if large corporate projects with substantial amounts of bespoke development are being considered.

It would be a mistake however to think size brings with it certaintly of stability. The cost bases of larger companies are frequently a lot higher and when markets move against a company or product, then these companies may have less scope to reduce them and can quickly become vulnerable. It is particularly true when discussing a division of a larger company where the relative size compared to the overall organisation is very small. I once worked for AT&T, a huge global company, which had a reasonable presence in financial services in the UK (owning a third of The Exchange at the time). However, the relative size of the UK business compared to the US was so small that it closed the UK operations virtually overnight without batting an eyelid and leaving some clients poorly served.

Some of the smaller companies – if focused on a niche area, may actually have more domain knowledge than exists in much larger organisations and may be closer to the clients and more nimble in how they respond to market opportunities. In terms of financial longevity, some relatively small firms have a substantial user base and therefore will always be of value in the market and even if they hit hard times, a competitor may buy them to access the user base.

The bottom line is for product-based companies, I think size is not of over-riding importance, as long as a critical mass of clients is reached and as long as the company is in good financial health. If the companies product and service is compelling and the management team is sound, then success and longevity should follow. For service delivery organisations, size does become important and prospective clients would do well to check that the resources of development partners are not going to over stretched before they contract with them. So, back to the company that took offence at my comment about them being small, perhaps their repost should have been – ‘they don’t make diamonds as big as bricks’!

The FSA has traditionally focused its regulatory attention on the point of sale transactions at the end of the value chain. As most of you will know, this includes things like Key Features, Adviser status and commission disclosure, as well as rules on how performance is presented. The FSA has become increasingly concerned that this focus and potential for intervention may be too late, and could leave the door open for more ‘mis-selling scandals’, which they are determined to avoid in the future.

Dan Waters has a specific interest in tackling risk management as he is the first ‘Director of Conduct Risk’ at the FSA. As a result of his view that the regulatory focus may be too narrow, he is looking at how they look more deeply and further up the value chain to include product design and oversight by the product providers (manufacturers). In doing so, the FSA intend to look at the business models of providers to see what the core strategy and drivers of income and profitability are. They will be looking up-stream of the point of sale including product development and marketing, as well as down-stream at post-sale handling and servicing. Whilst you may think that this would be covered and motivated by the obligations of TCF, the FSA seems to be unconvinced that Providers are designing products that add customer value or address real needs. Dan Waters believes that Providers are focused on designing what can be sold, or trying to beat a competitor, rather than trying to meet the needs of the consumer first and foremost.

How will this extension of supervisory scope manifest itself? Well it would seem that the FSA will be looking to test consumer outcomes (and/or see what testing the Providers have done?). They will be looking at stress and scenario testing to see what type of customer is and isn’t appropriate for the product and checking to see if the Provider has been clear about what the product does, who it is for and if certain key characteristics such as the nature and scale of risks is properly presented. The stress testing should look at a range of market conditions that could trigger certain product features that may not be immediately obvious or expected in normal conditions. The triggering of MVAs on With Profit Bonds in the past was a surprise to some customers (and advisers!) and I expect this is the sort of area that the FSA will want to expose as a potential risk. The process should be part of a systemic and objective assessment that is built into the existing supervisory framework.

Some may fear that this interest in the product governance and design is leading to a situation similar to some EU Countries which regulate product design. Dan Waters said that this wasn’t their intention. However, it is clear that whilst the spotlight on distribution is not changing, the spotlight is going to be extended to look at the products themselves and the motives and behaviour of the manufacturers. RDR is likely to cause some Providers to redesign parts or all of their product portfolios. In doing so, they should bear in mind that the FSA is going to be keeping an eye of what they build and why, as well as how it is sold.

Well here we are, already one month into 2010 and with just under 35 months to go before the RDR deadline of December 2012! It may be that there are many out there thinking this is still a long way off and with the World Cup and the Olympic Games being ahead of the RDR deadline, some may be lulled into believing that they can put off dealing with how they should respond until a later date. However, what we shouldn’t ignore is that the FSA is not showing any sign of moving the date or ‘softening’ the requirements, and the implications of change are potentially huge. To be fair, the FSA has still got to provide the detail in a number of areas and they have been criticised by advisers and providers for not having done so more quickly. They probably deserve this criticism and whilst all parties have a tendency to be defensive, the FSA has been rightly critical of some in the industry for delaying the start of the transition process.

As we have said on a number of previous occasions, the RDR isn’t going to go away – even if there is a change of Government. And, even with 35 months to go, the size of the task should not be underestimated. From a number of our regular conversations with managers in Distributors, Providers and Technology suppliers, it is clear that some people either haven’t read, or haven’t understood the requirements and implications. Some people still think that ‘Restricted Advisers’ will be able to get some form of commission based remuneration – reasoning that with a single tie, there is no product bias influenced by commission, so it must surely be ok. Whilst it is still not entirely clear how the articulation of the charge for advice will be calculated, the FSA is still insisting that the charge will be separate from the product price, that it will not be a ‘generic’ percentage and that it will need to be explicitly identified as a monetary amount. The challenge and potential complexity will be how to account for basic salaries, bonuses (which can’t just be for selling a product), and other remuneration elements. Will large distributors (Networks and Bancassurers) be able to negotiate such significant product pricing discounts as to make it difficult for smaller firms to compete. The issue that distributors need to consider is how they will respond when the FSA provides the detail, or to consider what their preferred approach will be beforehand and then communicate that directly to the FSA or lobby their trade body now.

Given that providers cannot offer ‘factoring facilities’ will the Networks try to do so, or will we see lending facilities being made available to customers to pay the fees in the same way as we have seen the GI market use these arrangements to fund the monthly cost of premiums.

With so much attention being focused on the distributors, it is easy to forget the Providers – manufacturers – of the products. Is the ‘factory-gate’ price as simple as ‘zeroing’ the commission? Some seem to think it is… However, Providers will need to look at what options they allow for offsetting the Adviser Charge against the product. Do they offer a wide or narrow range of options – the latter could be construed as Provider influence? How are illustrations going to show the effect of the options on benefits over time? What will they do, or be expected to do when a client cancels a plan or changes adviser? How will providers identify, monitor and report against the ‘decency’ test of Adviser Charging (especially when they don’t have all the facts in relation to what has been agreed between the customer and adviser)? Will the current number of Providers be able to compete in a more transparent world of ‘factory-gate’ pricing or will we see significant consolidation? Will they focus on niche products or will they be more generalist and use their brand to support either a single or multi-tied model to distribute their products? Will it just be a case of selling existing products with minor tweaks, or will a major redesign be needed? Will different products be used via different distribution channels… less ‘bells and whistles’ for Simplified Advice routes to market? Will anyone seize on the opportunity to manufacture more Stakeholder products?

What software will be needed to support truly holistic advice, what will be the role of Platforms – something still awaiting an FSA response (commented on by Dan Waters this week). What systems will be needed to try to cater for Simplified Advice and what opportunity is there for technology to support Basic advice business distribution?

There are lots of questions and the answers are not always known or obvious. AT8 is helping a number of providers, distributors and technology companies navigate through these issues. We believe that all parties should be considering them now and not just looking at the ones they think affect them most… the decisions of others may affect the conclusions that different parties reach at a given point in time, so there is some iterative ‘what if’ thinking to take place if it hasn’t already started.

As always the food was fantastic, the entertainment (a lady with a Monkey!) was good and the networking opportunities invaluable. The focus of the night however were of course the awards themselves. These were many and varied but I thought it worth mentioning a few that stood out from a technology perspective.

The first award worth mentioning was the award for Best Software Provider. Shortlisted for this award were 1st The Exchange, IntelliFlo, Prestwood and CCL. While I have written much about Prestwood and their software Truth in the past this was always going to be a battle between the two giants of the IFA Software market, IntelliFlo and 1st The Exchange. The battle has been going on for some years and feels a bit like the best soap opera awards at National Television Awards where the winners oscillate between Eastenders and Corrie. This year the honours at the Professional Adviser awards went to IntelliFlo, with 1st The Exchange getting an honourable mention.

IntelliFlo has made big strides in the last couple of years and grown their user base considerably. As one of the first IFA software solutions to embrace the world of SaaS (Software as a Solution) and still the leading SaaS world, their award is well deserved.

The award for best Online Tool was another battle involving IntelliFlo and 1st Software. This time however they were both pipped to the post by MorningStar. I have always found the Morningstar team professional and helpful and their application is gaining some major traction in the market at the moment. Other online tools consider were the TCF Centre from FinQS, a nice customer surveying tool, Trustnet and tools from Scottish Widows, AEGON and Skandia.

The award for best data provider saw 1st The Exchange go up against Assureweb, Morningstar, Trustnet and Lipper. This time 1st The Exchange came out winners with Assureweb getting an honourable mention. AT8 are just completing our annual survey of the portal market and while we continue to be impressed with the progress Assureweb are making, it is clear that Exweb from 1st The Exchange still leads this market providing the widest coverage of products and dominating in terms of market share.

AT8 have Infoblogs (factsheets) on Assureweb, Exweb, IntelliFlo, 1st The Exchange are available in or library section.