Provide Appropriate Advice & Services
Diploma of Financial Planning
Introduction to Technology in Financial Planning
Copy right TAFE 2013 – No materials from this presentation can be utilized
without the prior written permission of TAFE NSW
Technology
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Technology is an integral part of finance
www.zmescience.com
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Technology is pivotal to providing appropriate Advice and Services. In this
presentation, we examine the role of technology in financial planning, including
aspects related to the effective utilization of systems, platforms, portals, social
media and the “paperless office”.
Copy right TAFE 2013 – No materials from this presentation can be utilized
without the prior written permission of TAFE NSW
Technology
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Financial planning is a relatively new profession and is still “evolving”
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As recently as 2 decades ago, it was not uncommon for “advisers” to do client
based calculations and analysis on the back of an envelope or on scraps of paper
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In fact, only as recently as the middle of 2013, the term financial adviser and
financial planner has been legislated into law
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Over the course of the past several years, the financial planning industry has
witnessed an unprecedented amount of legislation and regulatory guidelines
The effective use of technology is therefore of paramount importance, without this
financial planners would spend almost all their time on administration, compliance
and paperwork!
Technology
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Advances in computer technology have meant
that desk top computers linked to servers can
handle very complex calculations and store
vast amounts of data
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Correspondingly, advances in printing and
copying technology have meant that
photocopying machines do not have to be the
size and cost of a small car.
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High quality multi function colour laser printers are
available for less than $500 and are small enough to fit
on a table top
Technology
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Back up devices of several devices are also now available at the fraction of the cost
that they were a few years ago
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Given the sensitive nature of stored information, as well the financial costs
associated with any time lost (and financial markets moving “against” the adviser...)
as well as regulatory issues, it is essential that all data be backed up on a daily
basis
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Back ups need to be stored in a separate location and a host of companies now
offer this service
Technology
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Many self employed financial planners commenced as one person operations,
working out of home offices, or small hired offices
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Clients were added on an incremental basis and everything was paper driven.
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As computers and office based software (Word, Excel etc) became more prevalent,
planners incorporated these for writing reports and plans
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However, many planners did not invest in customer relationship management
system (CRM), until their businesses reached a substantial size
By this time, transferring years of data from client files into the CRM would be a
tedious process, that could be fraught with errors.
Technology
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It is therefore essential, that any planner, wanting to establish a business, should
first invest in an appropriate CRM from Day 1
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This is akin to constructing an apartment block – first a considerable amount of time
and money has to be spent in surveying and digging a large hole and laying the
foundations
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Early CRM’s were just glorified databases, where planners could enter the names
and contact details of their clients and/or prospects
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Over time, other functionality was added, such as a field for comments (where file
note could be added) and basic query management systems, where planners could
ascertain facts such as: the number of clients on their books, the number of clients
with just insurance, the number of prospects that had not been converted into
clients etc.
Technology
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During the past several years, CRM’s have been specifically developed for financial
planners.
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Currently the most popular CRM’s for planners are COIN and XPLAN
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Both of these are extremely comprehensive and complicated. Planners need to
attend a series of workshops to fully utilize the functionality of these systems
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They allow planners to store customer information, file notes, portfolio details, as
well as easily construct templates related to Financial Services Guides, Risk
Profiles and Statements of Advice
Technology
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They also have the facility to provide real time information of client holdings, such
as shares and managed funds – these are updated via live feeds to various registry
houses, at the end of each business day
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They also have the facility to provide real time information of client holdings, such
as shares and managed funds – these are updated via live feeds to various registry
houses, at the end of each business day
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COIN and XPLAN have other ancillary tools to assist planners, such as comparative
software for personal insurances (comparing features, prices, strengths,
weaknesses etc)
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All this technology comes at a price – about $600 or more per month for a single
license....
Technology
Back to Basics
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Even a multi-million dollar computer system is only as good as the data that is
entered into it....
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One of the most overlooked areas of financial planning in relation to improving the
efficiency of a practice, is the quality of data and recording keeping.
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Data is the founding blocks of financial planning – planners need to take a strategic
approach to managing data and should ensure that data is easily accessible when
required and that it is secure and complete
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Naming conventions should be established for naming client files and documents
on computer systems and all staff should adhere to these rules
Technology
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For instance, it could be surname, given name followed by type of document and
date
Eg Smith Peter SOA 25012013
Or 20130125 SOA Smith Peter
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Naming conventions will allow staff to quickly retrieve the correct client file and
assist external stakeholders such as compliance, auditors and marketing staff to
access relevant data
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Proper naming conventions will also assist in client segmentation in relation to fees
and services.
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Remember, garbage in = garbage out! Data is only as good as what has been
entered.
Technology
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Financial planners deal with a variety of life and investment companies and
therefore their computer systems need to interact with relevant external systems
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For instance, a financial planner could have clients with insurance products with
AMP, Zurich and/or MLC
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Each of these companies would provide the financial planner with access via a
portal to their client records – this allows the planner to quickly access accurate and
current information such as premiums, features and contact details
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These companies would provide the planner with a user name/password etc
Technology
Platforms
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Almost all planners would have a certain percentage of their clients and therefore
their investment business on platforms
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This could vary from less than 10%, to more than 90% of their Funds under
management
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The benefits and features of platforms have been addressed in earlier weeks
Platforms now offer live feeds to CRM’s such as COIN and XPLAN and enable the
adviser to focus more on strategic advice and less on low level administration
based issues
Cloud computing and data security
www.gdv.com.au
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Cloud computing is a relatively new concept, but this will become more prevalent,
as band width speeds increase
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The incremental roll out of the NBN, will also lead to an significant increase in cloud
computing
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However, issues pertaining to data security will remain
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Planners need to invest in industry leading anti-virus software and ensure that this
is upgraded when required
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This will mitigate the risk of highly sensitive financial information being hacked and
thereby eliminate any potential liability and licensing issues
Technology
Social Media
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Social media such as face book and twitter are now widely used by almost all
segments of society – from primary school children, to computer geeks, to grand
mothers, to politicians....
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It is hardly surprising therefore that many financial planning practices have set up
their own face book page that provides updated information on events occurring in
the practice (new staff members etc) as well as photos and details of upcoming or
concluded seminars and other events
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Twitter is also a popular medium to regularly keep in touch with a large number of
clients, in a relatively short period of time
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You tube is also an excellent medium for advisers to upload seminars or
educational based information that includes a marketing message
Technology
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Whilst social media can and should never replace the personal relationship
between the planner and their clients, it can be utilized to create more personal and
frequent contact and therefore strengthen the client adviser relationship
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Social media is now another tool in the arsenal of planners, along with networking
and seminars – and one that is getting more powerful and effective by the day!
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Social media is also very cheap – there is virtually no on-going cost, besides the
expenditure of time
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It is not just for the young – the median age for Linkedin is 45, for Twitter it is 44
(Financial Planning Magazine July 2012)
Technology
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In conclusion, technology is changing rapidly and therefore its utilization in the field
of financial planning is constantly evolving
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Just as large corporations such as BHP and CBA now have a Chief Information
Officer present as a Director at Board Meetings, so too do large and medium sized
planning practices have an individual whose main job function is to ensure that
technology is effectively utilized.
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This will allow the planner to focus on what they do best – provide financial planning
strategies and advice for their clients.....