TECHNOLOGY IN YOUR BUSINESS
WHAT NEXT FOR ADVISER EFFICIENCY ?
David Ferguson Founder and CEO Nucleus
As a bit of a computer geek , I was fascinated by the
introduction of the World Wide Web and what became today ’ s internet . In the early to mid-1990s , the dawn of the internet began to introduce transparency into industries that had never really had a light shone on them before . The thinking behind founding Nucleus was along similar lines . We ’ ve always felt that this kind of ‘ forced transparency ’ would be really exciting , even before RDR , as there was this idea that technology could be used to make things better for clients , and to create a better financial services industry as a result .
A more efficient supply chain Back when I was successfully failing my actuarial exams , it wasn ’ t uncommon for the total charges a customer paid for investing to be as high as 3 to 5 per cent a year . If we look at Nucleus today , the end-to-end cost spanning platform , advice and asset management comes to about 1.8 per cent . Of this , about 0.8 per cent is for financial planning , 0.3 per cent is for the platform and 0.7 is for the portfolio management . There ’ s been downward pressure on all three elements for a while now , and we ’ d expect that to continue . The most human activity , and where the client has a relationship , lies with financial planning so it may be the cost of this increases slightly . It ’ s a well-recognised point that platform fees are falling . In essence , we see the platform ’ s role as making itself more efficient over time through the use of technology . That might be the way we interact with advisers and clients through client portals and the connectivity with different adviser systems . There is also scope for the use of data insights to see how platforms can lower the cost of investment management and improve value for money . There ’ s a clear role for platforms to play right across the chain .
Data , and the risk profile ‘ anchor ’ As financial planning has become about people ’ s lives , and more akin to coaching , we can use data to make that process better and more efficient . For example , if we look at the kind of lifestyle a
ULTIMATELY , IF WE WANT FINANCIAL SERVICES TO HAVE A GREAT REPUTATION , IT ’ S GOT TO BE MORE RESPONSIVE TO CUSTOMER NEEDS … . I CAN SEE A FUTURE WHERE WE HAVE A MORE FLUID INDUSTRY , AND ONE WHICH IS MORE RESPONSIVE TO WHAT ’ S GOING ON IN PEOPLE ’ S LIVES .
client is looking to have , you can then plan what cashflows are needed to sustain that . The investment and planning approach then takes into account the sort of portfolio a client requires , how the probability of achieving those cashflows can be optimised , and how the fees they pay can be minimised . Instead , what ’ s happened in the past is that a client will do an attitude-to-risk questionnaire that puts them at five or six out of 10 . Their portfolio will then be anchored around a single fundamental view of their risk profile , rather than what they want to achieve in 20- , 30- or 40-years ’ time . Ultimately , if we want financial services to have a great reputation , it ’ s got to be more responsive to customer needs . In the future , you can hopefully see a situation where financial planners and their clients are empowered to see real time analysis on their financial progress at the touch of a button . It may be rather than holding annual or quarterly planning meetings , a conversation is triggered by an alert e . g circumstances have changed . I can see a future where we have a more fluid industry , and one which is more responsive to what ’ s going on in people ’ s lives . But we ’ re only going to do it if we create that ecosystem and that connectivity to make the process of advice and investing as effective and efficient as possible . P
To find out how Nucleus can improve efficiencies in your business , please visit our website nucleusfinancial . com
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