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Advice firms face some hard choices on future ecosystem

The adviser firm ecosystem of today typically contains several building blocks.

At its centre sit the client, adviser, and support team. Branching out from that we see a back office/CRM system, various financial planning tools (such as cashflow and risk profiling tools), a client portal (possibly), cash management, and several platforms.

As clients’ expectation of their adviser’s digital capabilities increases – based on what they experience elsewhere – this set-up poses several challenges for firms. For example, the transfer of data from client to adviser to support team can be cumbersome – and may still include paper forms – while the use of multiple platforms and tools often means logging in and re-keying data several times.

There may also only be one-way integration between platforms and a CRM, and again between a CRM and client portal, resulting in a poor client experience.

Integrated technology

However, in the adviser firm ecosystem of the future, things are different. There are fewer building blocks and there is two-way integration between them.

Our blocks now include open banking alongside CRM, client portal, cash management, risk profiling, cash flow planning – and a single platform. APIs – Application Programming Interfaces (more on APIs in a moment) – provide the integration, enabling these blocks to ‘talk’ to each other and removing the tedious task of re-keying client data or logging into multiple systems. Meanwhile, open banking and freer access to client data could help firms build a client base of the future.

So, what are APIs? They enable two or more systems to connect, or ‘talk’. They create a higher degree of connectivity between platforms, services, and tools, allowing data to be seen and tasks performed from one place. If advisers can move seamlessly between platform, CRM, and customer portal, as well as between risk profiling and cash flow tools, it would revolutionise many financial planning practices.

I recently read that, on average, advisers key each bit of client information in at least three times. For any business, that is an extraordinary and unnecessary overhead. With APIs it means that, with new products coming to market, we are not creating a more disconnected world but increasing the level of connection with each new implementation. Though we may be a long way off that utopian view right now, I do believe the onus is on the industry to solve this conundrum. If we do not, regulators may step in.

These issues of connectivity and integration may be quite new to many advisers and wealth managers. How many firms have a CTO or a fleet of project managers to assess and provide the integration they need? Very few.

Proactive advice

There are also multiple benefits to greater access to client data. Once a customer allows access to their data, it means we could move to a more proactive state of advice relatively easily.

For example, it does not take a complicated algorithm to look through spending patterns and spot where there may be a major life event that would otherwise trigger a client review. We could then generate a nudge to the adviser. Of course, in a traditional advice model, the adviser wouldn’t necessarily need a nudge but, when we consider a more fluid advice market – perhaps engaging clients with smaller pots that aren't necessarily being advised on an ongoing basis – this sort of nudging is important. This is a cost-effective and proactive way of building a client base for the future.

For firms that plan to go through this change cycle over the next couple of years, there are going to be some relatively hard choices as they select which building blocks to use in their ecosystem.

But the benefits could be huge, with reductions in operational friction translating into more value for clients, potentially lower costs, and more time for employees to focus on serving clients.


About the author

Toby Larkman, Chief Commercial Officer, Embark Platform

Toby Larkman is chief commercial officer at Embark Platform, which provides access to a broad selection of funds, exchange-traded instruments and discretionary portfolios via a range of tax wrappers.


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