by Rory Curran, Executive Chairman, 1st Software

Rory Curran, Executive Chairman, 1st Software

Over the course of the many talks we have had about 1st Software’s New Model Adviser vision and the application of technology, the subject of wrap platforms has arisen many times. Whilst people broadly understand what these platforms offer, there is a great deal of confusion over how the platform and IFA client management system, such as Adviser Office, co-exist. In other words, do the two overlap and, if so, are they in competition? In 1st Software’s view, the client management system (CRM) and the wrap platform are totally complementary and I hope to explain the reasons why.

First of all, let’s look at the function of a CRM system. It is there for the primary purpose to manage the client relationships which lie at the heart of all successful financial advice business. A CRM system, such as Adviser Office, has front, middle and back office functions which all integrate to form one solution across an organisation of any size. The graphic below illustrates the point.

Now, let’s examine the wrap platform. At the most basic level, wrap platforms exist to aggregate clients’ holdings and to simplify administration. The combination potentially offers a greater level of service to the client and removes significant cost from the administration and service processes. Take valuations, where the client can access an online portfolio instantly and the IFA eliminates the cost of producing periodic valuations. Equally, consolidation of client holdings on a platform both enhances and simplifies the remuneration process.

I will leave it to the wrap platforms to explain the additional USPs of their offerings, except to say that they range from straightforward fund administration to discretionary managed services. The choice is up to the financial adviser but it is safe to say that some firms have chosen platforms depending on the type of client, so they may have contracts with several platforms. So, unless you are willing to commit all your clients’ holdings onto one platform, you will not be able to hold all your clients in one place. A CRM system is therefore essential.

I have been asked many times “Isn’t Adviser Office a wrap platform?”. It is true that Adviser Office is an aggregator because it holds all the client information but it does not have the electronic links for fund administration offered by the wrap platforms. What Adviser Office does have, though, are the electronic links to the providers for the legacy contracts which cannot be transferred onto a platform, such as investment bonds and personal pension contracts.

In order to understand how wrap and CRM works together, the graphic below illustrates the relationship. Wrap platforms handle assets and liabilities, whereas the CRM system manages the client’s personal information.

“Why don’t the wrap platforms develop CRM features?” is another common question. I would

use the historic invasions of Russia as a parallel: it looked possible on a map but ended in disaster because of the enormity of the task and the hostile environment. Developing a CRM system is a huge undertaking and is not core to the wrap platforms. In short, they have far more important things to be doing.

If competition exists between CRM and wrap providers it is in the area of financial planning tools. All the platforms have asset allocation capabilities, such as Morningstar’s x-ray, and risk profiling tools are becoming more prevalent. However, until the platforms can hold all the clients’ assets, including legacy products, a true picture of the asset balance cannot be clear. The reason we have developed links to all the wrap platforms, is to give our users the choice of platform and the ability to download holdings from the fund platform onto Adviser Office where every single asset can be aggregated.

Our research has shown us that the primary focus of financial adviser firms must be to spend more time on client work to generate more revenue. This means advisers must be freed up from anything which is not relevant to this. In theory, wrap platforms are manna from heaven because they take away a great deal of administrative work. The CRM system supports this process, allowing advisers to segment clients into service levels and to measure profitability.

Integrating CRM with wrap is the dream combination and, as someone at 1st Software poetically put it, ‘it’s aggregation without the aggravation’.

About Rory

Rory Curran, Executive Chairman and co-founder of 1st Software, has over 15 years experience of technology and the IFA market. Since 1st Software's launch in 1996, Rory has led the company's strategic development which has now put the company firmly in the position of market leader, with over 48% market share of the UK's leading IFAs. Rory, a regular industry commentator and contributor has also been pivotal in helping 1st Software achieve award winning status in industry-wide awards for rapid growth and professionalism, including the Virgin Fast Track and Deloitte Fast Track 50.