Strengthening Financial Planning in Investment Sales and Advice: The Role of Front-Office Automation (Strategic Focus)

Introduction

The marketplace for investment sales and advice is about to get more challenging. Several markets are shifting from commission to adviser charging models and most are demanding greater levels of adviser disclosure. With general consumer sentiment, distributors are going to need to significantly strengthen the financial planning experience. This report examines how this should be done.

Scope

*Coverage of the investment markets across Europe, North America and Asia Pacific

*Drill-down in consumer investment demands in Australia, Germany, the UK and US

*Examination of the role of financial planning across the investment sales and advice lifecycle, including client management, origination and review

Highlights

For many advisors moving to an ongoing relationship model, managing a high frequency of client contact is challenging given the high typical client-to-advisor ratios and significant advisor compliance workloads. Firms need to support advisors by providing 'workbench'-type support platforms that combine CRM sales and client management functionality.

Regulatory attention on financial advice, in response to misselling scandals, has created a common goal of greater disclosure and desire for stronger advice. This is leading a number of countries to tackle the remuneration conflict-of-interest issue head-on, requiring advisors to move from provider commission to advisor charging models.

Reasons to Purchase

*Unique analysis of Datamonitor's Financial Services Consumer Insights study to analysis implications of adviser charging on investment distribution

*Analysis of resulting business and technology strategy requirements to strengthen financial planning and move to a true client relationship model

*Examines what functionality adviser platforms need to support now and develop for the future


Report Highlights

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SUMMARY 1
Catalyst 1
Ovum view 1
Key messages 2
Consumer trust in financial advice has suffered from inherent conflicts of interest, driving demand for alternative information sources and execution-only services 2
Advisors will need to move from a 'sell and forget' attitude to a relationship-based client engagement model centered around high-quality advice 2
Goal-setting, risk profiling and portfolio construction can be enhanced through software tools 2
Advisors need platforms that allow greater client contact time and the ability to prioritize client servicing 3
Firms need to consider the full front office in scope, even when addressing specific pain points 3
SaaS delivery should be considered as a viable method of driving platform transformation 3
Table of Contents 3
INVESTMENT DISTRIBUTORS NEED TO ENHANCE ADVISORY CAPABILITIES 4
Consumer trust in financial advice has suffered from inherent conflicts of interest, driving demand for alternative information sources and execution-only services 4
The perception that advisors act in their own interest has reduced consumer trust in the service 5
Consumers are increasingly turning to alternative sources of financial information to support purchasing decisions 6
Push for greater transparency means advisors will have to show value of advice 7
Regulators are pushing for greater transparency and enhanced fiduciary duty 8
Most regulators are looking to enhance disclosure and client suitability requirements 8
Regulators are looking to remove conflicts of interest in the sales process through banning commission or more upfront disclosure 9
Advisors will need to move from a 'sell and forget' attitude to a relationship-based client engagement model centered around high-quality advice 11
FRONT-OFFICE AUTOMATION SHOULD IMPROVE PRODUCTIVITY AND ADVISORY PERFORMANCE 12
Financial planning and portfolio construction can be enhanced through software tools 13
Advice can be enhanced through objective planning and illustration tools 15
Firms need to enhance risk profiling and include risk in asset allocation and portfolio construction 17
Advisors need platforms that allow greater client contact time and enhance customer service across channels 18
CRM technologies around review scheduling and alerts can support the move to a relationship model 19
Advisor platforms need to support productivity through automated document creation and case management and analytics, with collaboration a future requirement 21
Multi-channel support will be essential, particularly online delivery 22
RECOMMENDATIONS 23
Recommendations for enterprises 23
Firms need to consider the full front office in scope, even when addressing specific pain points 23
Platform evaluation should focus on flexibility as well as business functionality coverage 24
Recommendations for vendors 24
Vendors need to support the shift to multi-channel distribution and more complex advisor structures 24
Vendors should also look to support SaaS delivery, given the distribution structure of industry 25
APPENDIX 26
Ask the analyst 26
Further reading 26
Methodology 26
Disclaimer 26
List of Figures
Figure 1: Financial advisors are consistently distrusted by consumers across major markets 5
Figure 2: Consumers making financial decisions are more likely to use online resources than professional advisors 6
Figure 3: Summary of main proposals of the FSA's Retail Distribution Review 10
Figure 4: Investing in technology improvement is an important strategy for a third of independent advisors 13
Figure 5: The main stages of the sales and advice cycle in the provision of financial advice 14
Figure 6: Key elements of an optimal integrated advisor platform 19
Figure 7: There is high variation in customer contact frequency in the independent advisor sector 20

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