The real cost of financial advisory software

By Wenda Field
Find me on: LinkedIn 06-Nov-2015 12:04:00


As someone who has been working within the financial advisory software market for over 10 years, I’m often approached by a large amount of financial advisory firms who find their current back office software isn’t delivering what it should. We know all too well, committing to a software package isn’t something firms do lightly and therefore selecting a flexible system that can deliver real benefits to a business can often be problematical.

For the entire financial services landscape, dealing with Retail Distribution Review has been a major task; the changing income structure for advisers being one of the biggest changes and challenges Firms have had to adapt quickly and become more efficient, employing fewer administrators and paraplanners.

At the same time, more and more of the firms’ clients are wishing to conduct business on their own terms, requiring firms to think strategically about providing an online self-service component to their propositions. Often, out of date practice management software can get in the way of providing these services. Financial firms find themselves burdened by the time it takes to value portfolios and reconcile income rather than focusing on improving client service and new client recruitment. This is where the real cost of ‘back-office’ (or practice management) software is.

Fairly recently Hobson & Company (a leading research firm focused on Total Cost of Ownership (TCO) and Return on Investment (ROI) studies), worked with Intelliflo to explore these challenges and learn how industry leaders are responding. H&C conducted independent research consisting of in-depth interviews with over 2,500 Intelligent Office (iO) users and found that a web-based practice management solution addressed client challenges across a firm to deliver a quick and compelling ROI.

The goal of this research study was to highlight examples of universal benefits where the impact of this practice management solution is not only strategic and timely but also measurable based on key motivating metrics validated with existing clients of iO.

The independent financial advice firms, networks, and regionals interviewed for this research study noted that despite their current practice management approach, whether an older generation practice management cloud solution, a client-server system or a manual approach, key challenges persisted across the firm in areas including: improving operational efficiencies, increasing recurring revenue, mitigating regulatory risk and minimising total cost of ownership.

Some of the results were truly staggering with firms realising an ROI from 100% right up to 600%!

In one instance, the value of iO is immediate and demonstrable. A sample mid-sized IFA with £150m in portfolio assets, 365 active clients, 6 advisers, and 8 support staff can realise annual benefits over £200,000 per year from their investment in iO. This is quite a substantial annual saving to make across any business, with other firms who took part in this research also confirmed great time (and ultimately cost) saving benefits.

Download the full findings of the research conducted by Hobson & Company here and to discover how agile your business can become, take the ROI challenge here to find out the real cost to your current back office software.