(pre-empting) the state of the adviser nation

Hello again. Last time round you may recall that I used this column to talk about something completely different; mental health in the workplace. It's to the good people at Synaptic's credit that they gave me free reign to talk about a difficult subject.

One of the parts of the advice profession that interests me the most is how firms stitch together the various bits and bobs of software that they need to use to form their advice processes; back office, cashflow, investment research, reporting, platforms and risk profiling being the main suspects among more than a few others.

This time round it's back to familiar subject territory but I'm still going to play with convention and do a different kind of article.

In late 2018 the lang cat launched its inaugural adviser census work. Called 'State of the Adviser Nation' it gathered data and opinion from 235 of the very finest minds from all throughout the advice profession. Planners, compliance, admin, investment management, advisers, paraplanners - irrespective of role, we wanted to hear their views towards many aspects of the advice profession and the wider financial services sector that we all know and love.

As I write this, the second wave of this research has just gone live in the field but when the time comes to write my next article, we'll be sat on the next mountain of insight from the sequel. So, I'm going to turn the format on its head and make some predictions as to what the results are going to be whilst revisiting some of the conclusions from last time round. Then, next article, I'll take a look at how hopelessly wrong I was, or indeed how much I have my finger on the pulse. Nostradamus or not-so-brightus? Time will tell.

Centralise, rinse, repeat

Last time round, the overwhelming majority (around 85% or so) of respondents said that their firm ran a centralised investment proposition (CIP). When asked about a centralised retirement proposition (CRP) though, the majority stated that there was no real change in the investment vehicles used. Instead, it was all about having a different set of processes. Increased use of cashflow, more in-depth review process, use of cash management and core income provision were key, as opposed to any meaningful change in the actual investment ranges used. Based on recent conversations with advisers I reckon this pattern will hold firm and I also reckon a year is too short a length of time for such a complex issue like this to shift. That's prediction #1.

We got people to rate each platform in the sector based on their gut instinct towards their reputation, irrespective of whether they used them or not (i.e. their 'favourably'). We got a huge range of responses, commensurate with the various levels of momentum or indeed disruption that each platform was facing.

You need educ ating

One of our themes in last year's study looked at trust in the sector and how we could try and foster a better level of trust with the general public towards the work we all do. We presented participants with a range of statements and asked them to rate how strongly they agreed or disagreed with them. These ranged from whether we're all tarred with the same brush from some questionable behaviour at certain large organisations (i.e. the banking sector) to whether the level of trust is actually better than we all believe. Surprisingly (to me anyway) one theme that came through strongly was the need for financial education in schools.

This year, we're presenting people with a range of statements in the context of the advice gap in the UK. One statement proposes that financial education would help people realise the benefit of financial advice. My prediction is that this will come through strongly again, despite this being a topic of fierce debate and despite me not being sure if I agree with it. In particular, being married to a teacher, I can see the challenges of adding yet-another-thing into the curriculum.

Can I ask a favour?

The lang cat being the lang cat, we naturally asked a few things about our heartland; the platform sector. In one particularly interesting section, we got people to rate each platform in the sector based on their gut instinct towards their reputation, irrespective of whether they used them or not (i.e. their 'favourably'). We got a huge range of responses, commensurate with the various levels of momentum or indeed disruption that each platform was facing. We're asking the same this time round and my prediction is that overall mean average scores will have reduced year on year. I think there are pockets of success in the sector (AJ Bell and Parmenion are flying, Transact are Transact, Aviva are recovering) but by and large it's been a tricky old year. Naturally, I hope I'm wrong with this one.

CTRL-ALT-DELETE

One of the parts of the advice profession that interests me the most is how firms stitch together the various bits and bobs of software that they need to use to form their advice processes; back office, cashflow, investment research, reporting, platforms and risk profiling being the main suspects among more than a few others. Last year's study threw up a few clear conclusions:

  • the majority of advice firms have a preference to use 'off-platform' best of breed tools as opposed to integrated software;
  • back office tools are the most embedded within a business and the least likely to change; and
  • most firms stated that they review their platform adoption at least once a year.

My prediction is that I reckon all of these will hold firm. But from my conversations with advisers, I think we'll hear more grumbles from a data and reporting perspective. I speak to lots of firms who have grown increasingly tired of the disconnect between something as simple (from a client perspective) as cashflow modelling and the increasingly rigid reporting obligations they have. I speak to few advisers who are completely happy with the output they get from providers and I believe there's huge opportunity there for software to do a lot better.

So, there we have it. I'll be back next quarter with a report card on how I've done on the prediction front, along with other interesting headlines that crop up.

See you next quarter.

Visit www.langcatfinancial.co.uk for more from Steve and the rest of the lang cats.