Financial planning firms have always struggled to form a complete picture of what is happening internally.
In part, that is because the industry was wired back to front, from product systems and their needs to the customer, not from the customer and their needs to the product.
From platforms to practice management systems, much of the technology was built around commission plans, rather than financial plans.
Even today, the voice of the customer can get lost because data captured focuses on compliance needs rather than customer needs.
Complicating the picture is that systems have been added piecemeal, creating a set of isolated data islands.
While there is recognition that firms need a golden source in the form of the practice management system, firms face challenges if this source cannot talk to the various other systems of record used in their financial planning and investment processes.
By ending commission, the Retail Distribution Review began a reversal in the old working models.
However, it is only now, a decade on, that financial planning firms are truly able to put the era of product sales behind them by making use of a rapid evolution in technology to put the customer at the heart of their business.
That technological leap is allowing firms to monitor and evaluate their activities, equipping them to better serve their clients and demonstrate their value to the regulator.
What has changed? First, digital tools have given customers a voice, allowing them to capture their needs as they see them, in their own words.
In a consumer duty world this will only accelerate, because understanding the customer’s desired outcomes in their own words is a fundamental tenet of the regulation.
Effective financial planning relies on accurate client-facing data. You cannot show a client a financial plan based on holdings that are inaccurate, or discuss income and expenses unless they are recorded correctly.
Increasingly, customers are adding that data themselves, and it is pulling into the planning system to allow advisers to create an ‘as-is’ position, a ‘desired-to-be’ state and the action plan required to get there.
Second, connectivity has taken a huge leap forward. API technology has enabled advice systems of record to talk to a firm’s golden source – often the practice management system or CRM, taking in basic information and providing high-quality, enhanced, planning-based data in return.
This allows firms to build bigger data sets that provide greater insight.
Now, the low-code/no-code trend is accelerating the process. Low-code/no-code approaches allow systems to be connected without the significant time, money and expertise required for API projects – a particular benefit for SMEs with limited development resources.
Finally, firms are aggregating information from their systems of record in data lakes – a form of data repository that can hold raw, unstructured data from multiple sources, just as a physical lake can be fed by numerous rivers and streams.
