Search

Fixing the financial planning ‘plumbing’

Visible Capital’s CEO Ross Laurie wants to deliver a new standard for client onboarding

The client onboarding process is one that frustrates many financial planners. We explored the issue in our business benchmarking report, in partnership with the PFS, and found that on average the time that elapses between making first contact with a new client and delivering the first piece of advice is three to four weeks. For 38% of businesses, the time lag is more than four weeks. As we noted at the time, you never get a second chance to make a good first impression, and that delay is costly for advice businesses and falls short of the slick and prompt service expected by today’s consumers.

Just under a third of adviser businesses had calculated the cost of this onboarding process and found that bringing a new client into the business runs at just over £1,500.

We spoke with Alan Smith of Capital Asset Management who agrees, “the client onboarding process needs a huge amount of work”. Capital have explored open banking as a way to smooth the onboarding process. Alan explains, “if a client gives us permission, we can then go and obtain all the information we need to build the advice proposition. Instead of writing off, or asking for their income and expenditure, which no one ever really knows. Let’s go to where the data sits and extract the information.”

A number of financial planning technology providers are tackling the onboarding issue from various angles, with solutions coming to market from Advicefront, CashCalc and others.

We spoke with Ross Laurie of new Edinburgh-based start-up Visible Capital, to find out how he is on a mission to fix some of the “plumbing” issues in financial planning businesses with open banking solutions, and client onboarding is the first issue on his list. “Advisers are using these great back office systems, but there’s no way to get the data in”, he explains. “The conversation usually goes, ‘can you bring in three months’ bank statements’ or ‘can you fill in this questionnaire’. It’s a very manual process.”

A meeting with his mother’s financial adviser provided the lightbulb moment that brought together all of Laurie’s background in fintech, business process reengineering and open banking experience, and seeded the original idea for Visible Capital. “He was doing her retirement planning and the problem I saw was, my mum was very vague on the data she was giving over verbally. I started getting very concerned,” he recalls. “If we’re going to start using AI to model people’s lives, we better make sure that the corpus of data they’re using is bang accurate. Otherwise garbage in, garbage out…”

The Covid crisis has proved beneficial to the new start-up firm in a number of ways. “It has allowed us to get our heads down and get a couple of weeks ahead of schedule”, says Ross. But it has also been the catalyst for a number of important changes in Ross’ view. Firstly, firms want to move away from paper-based systems, and secondly, Ross believes it is accelerating a shift in attitudes and consumer adoption of online processes.

Client reluctance to share their full banking details would be a potential drawback to open banking. Some advisers we have spoken to describe a polarisation of clients between those who are comfortable with sharing data and those who absolutely resist. Laurie isn’t too concerned: “You remember when they first brought out that you could pay for things up to £10 on your card without touching anything and we all had a meltdown? Now it’s up to £45 and no one bats an eyelid. It’s an adoption that happens with technology.”

He is also keen to stress that the client has full control over what they want to share. The client would receive an email from their adviser to complete a data collection exercise (securely, using Unipass). They log in, enter the details – as many accounts as needed – and generate a wealth assessment. The Visible Capital tool categorises all their transactions into five categories: income, needs, credit, wants and savings. An eight-page report is downloaded by the client and they can either take the pdf to their adviser or click a button and the data goes straight into the adviser’s back office or is sent as a csv file. Visible Capital is currently integrated with Intelliflo and Iress, with Benchmark and Salesforce next on the development plan. “It’s accurate data,”, says Ross, “compliant and secure”.

As well as the initial onboarding process, the open banking data would feed into ongoing annual wealth assessments and suitability checks. “For MiFID II”, Ross explains, “it’s not going to be enough to just put in whatever needs to be done to get to the next stage in, say, CashCalc. We’re going to work tirelessly to try and develop this as a standard.”

While Visible Capital’s ambitious plans will solve some of the issues of data capture, there is some way to go to reducing the time from three weeks or more. Advisers in our survey last year told us the biggest delay to client on-boarding was getting information from providers. At NextWealth we think that Open Banking needs to be extended to Open Savings and Investments or Open Money to allow firms like Visible Capital to truly unlock the power of data and integrations to reduce friction in client on-boarding. Capital’s Alan Smith is keen for a day when “rather than us sending forms to the providers, just provide us with access to their data, probably for a limited period of time just until we’ve got the information we need”.

Visible Capital plan to tackle pension valuations in phase two, and data-driven risk assessment is also in Laurie’s sights. “We reckon if we can look across people’s spending we can understand the general risk profile”, he says. “We can certainly assess capacity for loss, but can we move it on to make an assessment of attitude to risk?”

It’s another plumbing issue that Ross feels needs fixing. “I always fundamentally believed we’d find a better way to do money,” he says, “and we want to provide that secure compliant plumbing that allows advisers to give advice”.

Financial advice firms who are interested in trialling Visible Capital’s tool can find out more at www.visiblecapital.io or via info@visiblecapital.io

 


If you’d like to talk tech with NextWealth, please email us. You can also review your tech partners on our Directory. Just login and leave a review under your name or anonymously.

Keep up to date