Introducing sophisticated automation for your CIP

Alastair Black, Head of Wrap Platform Proposition at Standard Life, explains how the Professional Portfolio Manager capability can have a positive impact on capacity in an adviser firm.

It has been almost four years since the pension freedoms were introduced by then Chancellor George Osborne, freedoms which have revolutionised retirement planning in the UK.

Since this pension milestone in 2015, the need for advice around retirement planning has been ever-growing. The FCA’s 2017 Retirement Outcomes Review highlighted an eleven-fold increase in drawdown exceeding all expectations, as those reaching the age of 55 take advantage of the new flexibility around their retirement savings.

However, financial planning in retirement brings with it much complexity with the ongoing management of suitability for investments. Although this is to be expected, financial goals can change frequently when people reach retirement, with life-changing issues to deal with like declining health, death, and even divorce. These changes in family circumstances take on a new importance when there is no regular income and more focus is required to manage those underlying investments.

Furthermore, the suitability reporting regulation in MiFID II requires advisers to carry out full, annual ongoing suitability reviews as part of advice. The ongoing review process needed to remain compliant creates a huge amount of work, especially when client needs are complex. It can be a challenge for adviser firms to meet the capacity issues and cost issues that result.

A sense of responsibility

Recent Standard Life research revealed that 68 per cent of advisers believe the overwhelming challenge within their business is managing risk and capacity. It is difficult to find time for face-to-face client meetings and new business development when advisers are pulled in so many directions.

Advisers we speak to feel a deep-rooted sense of responsibility for providing the best service possible to their clients. However, with the demands on their time, they’re struggling to meet the sheer volume of work required to fully satisfy client needs.

The explosion of demand for retirement planning and the need for advice is almost like a perfect storm of needs. The issue now is how can advisers create efficiencies within their business and step back to get perspective on their processes for managing existing clients? The issue is also about how we, as a platform provider, can use the expertise we’ve gained to support advisers in doing that.

Solving the capacity conundrum

Over the longer term, the amount of time spent managing the raft of client portfolios will become unsustainable for an adviser firm unless it embraces the latest tech that will support their business.

Overseeing ongoing reviews for clients in retirement and managing their investment portfolios can be supported more efficiently by the adoption of our Professional Portfolio Manager (PPM) technology.

PPM offers multi-portfolio, multi-tax wrapper functionality, and a range of automated reporting options, from mechanical rebalancing to permitted investment controls. It offers advisers the ability to match a client’s goals and needs, such as retirement income or inter-generational wealth transfer. This sophisticated automation is genuinely a new innovation for adviser firms.

Both financial planning and investment planning make up the advice process and by automating the investment planning part of the journey, advisers can gain time to focus on client services.

More clients, better outcomes

Since the Retail Distribution Review was introduced, there has been a recognised advice gap in the UK. In addition, many people undervalue financial advice and are reluctant to pay for it. With PPM, advisers can deliver a more scalable CIP, reduce their risk, and carry out portfolio management more cost effectively.

With the explosion of people needing advice, this technology solution can help advisers free up capacity to enhance the long-term profitability of their businesses while enabling them to take on new clients and provide more of the services, such as client communications, that can lead to better client outcomes.

The value of investments can go down as well as up and could be worth less than originally invested. The views expressed in this blog should not be regarded as financial advice.

Alastair Black image

Alastair Black, Head of Wrap Platform Proposition at Standard Life

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