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

• 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”.

• Technology is an integral part of finance

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Copy right TAFE 2013 – No materials from this presentation can be utilized without the prior written permission of TAFE NSW

Technology

• 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

• In fact, only as recently as the middle of 2013, the term financial adviser and financial planner has been legislated into law

• Financial planning is a relatively new profession and is still “evolving”

• 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

• 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.

• High quality multi function colour laser printers are available for less than $500 and are small enough to fit on a table top

• Advances in computer technology have meant that desk top computers linked to servers can handle very complex calculations and store vast amounts of data

Technology

• 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

• Back ups need to be stored in a separate location and a host of companies now offer this service

• Back up devices of several devices are also now available at the fraction of the cost that they were a few years ago

Technology

• Clients were added on an incremental basis and everything was paper driven.

• As computers and office based software (Word, Excel etc) became more prevalent, planners incorporated these for writing reports and plans

• Many self employed financial planners commenced as one person operations, working out of home offices, or small hired offices

• 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

• 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

• Early CRM’s were just glorified databases, where planners could enter the names and contact details of their clients and/or prospects

• It is therefore essential, that any planner, wanting to establish a business, should first invest in an appropriate CRM from Day 1

• 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

• Currently the most popular CRM’s for planners are COIN and XPLAN

• Both of these are extremely comprehensive and complicated. Planners need to attend a series of workshops to fully utilize the functionality of these systems

• During the past several years, CRM’s have been specifically developed for financial planners.

• 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

• COIN and XPLAN have other ancillary tools to assist planners, such as comparative software for personal insurances (comparing features, prices, strengths, weaknesses etc)

• All this technology comes at a price – about $600 or more per month for a single license....

• 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

• 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

Technology

• Even a multi-million dollar computer system is only as good as the data that is entered into it....

• 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.

Back to Basics

• 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

• Naming conventions should be established for naming client files and documents on computer systems and all staff should adhere to these rules

Technology

Eg Smith Peter SOA 25012013

Or 20130125 SOA Smith Peter

• For instance, it could be surname, given name followed by type of document and date

• 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

• Proper naming conventions will also assist in client segmentation in relation to fees and services.

• Remember, garbage in = garbage out! Data is only as good as what has been entered.

Technology

• For instance, a financial planner could have clients with insurance products with AMP, Zurich and/or MLC

• 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

• Financial planners deal with a variety of life and investment companies and therefore their computer systems need to interact with relevant external systems

• These companies would provide the planner with a user name/password etc

Technology

• Almost all planners would have a certain percentage of their clients and therefore their investment business on platforms

• This could vary from less than 10%, to more than 90% of their Funds under management

Platforms

• 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

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• The incremental roll out of the NBN, will also lead to an significant increase in cloud computing

• Cloud computing is a relatively new concept, but this will become more prevalent, as band width speeds increase

• However, issues pertaining to data security will remain

• Planners need to invest in industry leading anti-virus software and ensure that this is upgraded when required

• This will mitigate the risk of highly sensitive financial information being hacked and thereby eliminate any potential liability and licensing issues

Technology

• 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....

• 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

Social Media

• Twitter is also a popular medium to regularly keep in touch with a large number of clients, in a relatively short period of time

• You tube is also an excellent medium for advisers to upload seminars or educational based information that includes a marketing message

Technology

• 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!

• Social media is also very cheap – there is virtually no on-going cost, besides the expenditure of time

• 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

• 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

• In conclusion, technology is changing rapidly and therefore its utilization in the field of financial planning is constantly evolving

• 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.

• This will allow the planner to focus on what they do best – provide financial planning strategies and advice for their clients.....