Financial Planning Software to Meet New Industry Demands

As the financial landscape is changing fast, with institutions and regulators looking to keep pace with advances in technology, advisers are under increasing pressure to meet new demands, in terms of the sophistication of their advice process and regulatory requirements. We explore how financial planning software is modernising the industry, the benefits that new software offers advisers and the key considerations for choosing the best solutions for your firm.

Key challenges facing today’s financial advisers

The Financial Services sector has endured a lot of disruption in recent years, which has particularly impacted financial advisers. Traditional rules and processes have been through significant changes, which has seen a lot of players leave the market, over 1500 firms being de-authorised (between 2015 and 2020) and a trend of big firms merging and consolidating.

Then there are the market’s customers, whose expectations and demands have increased, due to changing attitudes, digital innovation and initiatives like the FCA’s Retail Distribution Review (RDR) and the Financial Advice Market Review (FAMR), which sought to improve the distribution of retail financial services products, increase awareness and consumer confidence and establish a retail investment market that consumers could trust.

Advisers have had to up their game and ensure their financial planning processes are consistent, compliant and robustly tested and analysed, whilst enhancing their automation and digital advice capabilities. The FCA’s evaluation of the aforementioned initiatives found that consumer awareness of automated advice had increased, with 19% of consumers in 2020 reporting that they’d heard of automated advice services (compared to 10% in 2017). Whilst a report from Deloitte revealed that 43% of 35-44-year-olds surveyed would use automated financial advice tools.

So, what challenges do advisers face in this volatile environment and fast-changing industry? Here are some of the key challenges for advisers in today’s financial landscape:

Regulatory challenges

Meeting compliance obligations from new directives, such as MiFID II
Proving suitability (ensuring forecasts are fair, accurate and not misleading)
Ensuring consistency of the advice process
Stringent reporting requirements

Heightened client expectations

User experience
Clearer demonstration and visibility over financial plans
A better understanding of risk and suitability
Delivering the best possible outcomes
Allowing for market volatility and unexpected events (stress-testing)
Clarity over clients’ risk appetite and capacity for loss

Legacy technology and processes

Disparate systems
Data silos
Misaligned/inefficient processes
Time-intensive manual tasks
Human error
Competitiveness/falling behind the market

Why advisers need advanced financial planning software

Financial planning software has come on leaps and bounds in recent years, with solutions leveraging automation and AI to expand the capabilities and range of tools advisers have at their disposal to deliver better outcomes for their clients. The challenges facing advisers demonstrate why it’s so important for advisers to have robust tools and efficient processes.

To improve advice consistency, client satisfaction and regulatory compliance, firms must explore modern software solutions that can empower their advisers to meet and exceed industry standards and gain a competitive advantage.

Let’s look in-depth at the key reasons why advisers must embrace online financial planning software and enhance their digital toolkit.

Legacy systems are no longer fit for purpose

The way that financial advisers are creating and optimising investment plans for clients is changing. Modern solutions are helping advisers to be more efficient, strategic and compliant, enabling them to deliver better outcomes for clients. As technology advances and expectations increase, firms working with legacy systems and processes can get left behind and are exposed to greater risks of non-compliance with new regulations.

T3 and Insider Information’s 2021 Advisor Software Survey report, based on over 5000 respondents, revealed that financial planning was rated as the second most valuable piece of advisers’ software suite, only behind CRM systems.

Here are some of the issues that advisers encounter with legacy systems and technology:

Having to switch between tools, which risks data and output misalignment
Increased risk of human error
Time wasted rekeying data and configuring tools
Difficulties demonstrating suitability and value (leading to decreased client confidence/trust)
Inefficient/ineffective tools for defining risk appetite/capacity for loss and aligning plans with clients’ specific objectives
Regulatory issues and decreased capabilities for proving/demonstrating compliance (potentially leading to penalties/fines/reputational damage from breaches of rules

Inefficient existing processes

Legacy systems and processes can also lead to inefficiencies, resource-wise and from a cost perspective. Manual processes and siloed data sources can mean your team spending excessive time and resources on tasks and processes that could be significantly reduced with automation and online financial planning software.

Inefficient adviser processes can lead to:

Wasted money, time and resources
Frustration, bottlenecks and slower delivery times
Reduced productivity and missed opportunities
Customer dissatisfaction/distrust
Poorer quality of advice and less sophisticated analysis and financial plans

If you’re considering overhauling legacy systems and advice processes, check out our blog: How Digital Transformation in Financial Services is Helping Firms to Increase Operational Efficiency

Streamlining your tech stack

As we mentioned, disparate data coming from different systems can lead to various inefficiencies. Having integrated systems that talk to each other and processes that are aligned can transform your adviser capabilities. Part of exploring new financial planning software and overhauling legacy systems is about streamlining your tech stack, to achieve a smooth, end-to-end adviser process.

The outcomes of a streamlined tech stack include better control, visibility and demonstrable compliance - meaning data is consolidated and any actions taken can be tracked and can inform other parts of the advice process. No more jumping between systems or having to make manual updates to reflect changes.

Learn more in our blog: Streamline Your Tech Stack with EV’s End-to-End Financial Planning Tools

Holistic view of client’s financial future journey

Beyond streamlining your tech stack and processes, you should seek to achieve a holistic view of the financial planning journey. Better visibility over the actions involved in crafting financial plans for clients helps to ensure the right steps have been taken and other factors, such as cash flow considerations and risk appetite, have been accounted for. Plus, you’ll be able to better communicate advice and financial plans to clients, particularly when carried out remotely.

Increased regulatory obligations

The impact of MiFID II (and other global directives) has reverberated around the industry and put a lot of pressure on firms to make the required changes and maintain robust processes to meet new regulatory obligations. Many smaller advisory firms and IFAs have struggled and traditional firms have looked to sell up as a result of regulatory pressures.

MiFID II has added considerable complexity to reporting requirements, particularly when advising on changes to investment portfolios. And without the most efficient tools or processes, it can be difficult to get hold of the information required. There is a significant administrative overhead for firms, and smaller organisations can struggle with resources to maintain compliance.

There are various facets of Financial Services compliance, but one of the key elements is demonstrating the credibility and suitability of your advice. Modern financial planning software can support your compliance demands under MiFID II and enables advisers to demonstrate and justify investment suitability, with actions tracked and financial plans and risk definitions visible for regulators and auditors.

Falling behind the competition

The result of many of the reasons for embracing financial planning software mentioned above is the risk of falling behind the competition. Firms with modern systems, efficient and streamlined processes and demonstrable compliance will be better positioned to grow, increase productivity and profitability and deliver the right experience and outcomes for clients.

A new breed of advisers and savvier clients demand and expect more sophisticated financial planning tools and analytical capabilities. If you’re not innovating and evolving, you risk getting left behind.

For more insights on the topic of modernising your firm’s tools and process, download our Guide to Modernising Your Financial Planning Advice Process & Technology

The importance of choosing the right financial planning software

Choosing the right financial planning software for your firm depends on a range of factors. For example, the pricing model of certain software options may not be appropriate for the size of your organisation, whilst other solutions might be more suitable for your client base. Also, the ease of integration and the level of support offered by solution providers may dictate the financial planning software that you choose.

Key considerations when exploring financial planning software providers

We outline some of the key considerations for advisers that should factor into your selection process when exploring prospective financial planning software providers. Take a look.

Ease of integration/compatibility

The ease of integration and compatibility of online financial planning software is an important factor to consider, as the technical requirements and level of integration required can dictate the scope of your project. Will it require a simple integration into back-office systems and current platforms? Can you utilise APIs? Or will you need to overhaul existing systems and processes?

Onboarding process

Related to the above, it’s important to know the typical length of the onboarding process for prospective financial planning software solutions and the level of support you’ll get from the solutions provider.

Solution user experience

This consideration is a two-fold factor. If you’re looking for modern financial planning software that boasts a good user experience, you want it to be easy for your advisers to use but also simple for your clients to understand and visualise, especially when taking clients through their financial plans and the processes and analysis that went into them. Seamless digital portals are the future. So, knowing what kind of user experience and interface to expect from the software is crucial.

Pricing/ROI

When exploring new software options, you need to make sure that the solution you choose is cost-effective and can deliver on your expected outcomes. Understanding the software’s pricing model and how it suits your business size, operational structure and growth plan is something you ideally want to do early on in your search.

For example, are there scaling benefits for larger firms? Are there incentives for using a full-service or enterprise solution versus a lower-tier option or individual software modules?

Range of tools, features and capabilities

What can the software do? Putting aside pricing, compatibility, support, etc, your primary focus when exploring financial planning software solutions should be the capabilities that they bring to the table and how that aligns with your needs.

It’s a good idea to assess and define your key requirements, the strengths and weaknesses of your current systems and processes, and the challenges you’re looking to overcome. This will enable you to make more informed judgements about the solutions’ suitability, map the features and capabilities against your needs, and prioritise (must-haves and nice-to-haves, etc).

Provider experience/expertise

The level of expertise and experience of the financial planning software provider is key for giving you confidence in the solutions and trusting that they’re the right choice for your firm. How long has the business been operating? What’s their background? Along with their technical expertise, in terms of the product they’ve developed, do they have comprehensive knowledge of the industry and needs of today’s advisers and their clients?

Level of support and training

Find out what level of support you can expect from the software and its provider, as well as whether training is available for getting to grips with the tools and maximising their use. Some software may have a comprehensive knowledge base or FAQs to help with understanding how to use the software’s various features and functionality. Other solutions will provide dedicated support and training for advisers from real people, or even online courses and certifications.

Regulatory/compliance considerations

Your financial planning software should be suitable for your clients’ needs and be able to follow specific regulatory requirements for the purpose for which it’s being used. Be clear about your regulatory obligations and ensure the software has the capabilities to support the delivery of your regulatory requirements, such as ensuring the clients understand their position, capacity for loss, risk appetite, etc, and meeting reporting compliance stipulations.

Also, find out what security tools and protocols each solution uses and how they match your firm’s expectations and security requirements/demands. Digital solutions make it easier for firms to meet regulatory demands, such as record-keeping, cyber security and data protection.

For more on adviser compliance considerations, read our blog: How Adviser Firms Can Improve Their Compliance Risk Management Process?

Outputs, reporting and audit trail

Knowing the functions and analytical capabilities of different financial planning software solutions is one thing, but you also want to know what happens upon completion of financial plans and the output and reporting side of things. What format will the plans be available in? How will actions be recorded/reported? Is everything trackable and accessible and is there a clear audit trail, for internal use and regulatory purposes?

Use cases and demo availability

Most firms, when seriously considering certain software solutions, will want to see some form of proof of impact, relatable use cases and demonstration of the software in action. Request case studies and demos from prospective providers. This will help you to further judge the quality of the solution, its suitability for your needs and your confidence/trust in its capabilities.

For more details on the key considerations for advisers, download our free Checklist to Choosing the Best Financial Adviser Planning Software for Your Firm.

What benefits to expect from modern adviser tools

So, what should you expect from modern adviser tools, in terms of features, functionality and impact? We outline the key benefits that adviser firms can enjoy from some of the top financial planning software solutions on the market.

Time-savings and efficiencies

Using digital software to support your financial planning process can reduce time-consuming tasks and cut out manual processes, where possible, improving your efficiency and reducing the time and cost of servicing clients. This will allow you to take on more clients and provide a more cost-effective service.

Also, with the increasing need to deal with clients remotely, financial planning software solutions will help you avoid time spent travelling and reduce the need for face-to-face meetings.

There are various other time-savings and efficiency benefits financial planning software can offer, such as:

Faster problem identification, resolutions and backsolving
Reductions in time spent on manual cash flow planning processes
Rapid acceleration of calculations and analysis
Stress-testing capabilities and speedy comparisons of plan revisions
Overall streamlining of processes

User-friendliness

Modern financial planning software should not only simplify and speed up processes but should also improve the usability of your adviser tools. User-friendly software is an advantage for both advisers and clients, making communications and demonstrations simpler, more enjoyable and easier to understand.

You should expect a clean and engaging interface that simplifies the complexities of your financial plans and analysis and enables consistency in your advice process. User-friendly tools are also easier to learn and train your advisers on, saving you time and empowering advisers.

Read our article on how to help retirement clients better understand their financial plans.

Demonstrable suitability

In today’s post-MiFID II financial landscape, advisers must be diligent with ensuring their advice is suitable and compliant every time. Regulators (and even clients) expect advisers to be able to demonstrate suitability. And your financial planning software needs to empower you to do this, enabling you to align investment plans with clients’ risk profiles and objectives and demonstrate the workings.

Sophisticated forecasting methodologies

Effective financial planning software needs an intricate analytical engine behind it, to ensure that forecasting is accurate, meaningful and able to take into account a wide range of factors, including the clients' needs and profile and the market conditions and risks.

Different systems will use varying methodologies. For example, EV’s financial planning tools are powered by stochastic modelling. Most solutions will use either a stochastic or deterministic model. Stochastic forecasting models can incorporate randomness to account for a wide range of unforeseen and unpredictable events.

Our handy blog looks at these methods and compares the pros and cons of each - take a look: Stochastic vs Deterministic Models: Understand the Pros and Cons.

Customisation capabilities

Modern financial planning software should be as customisable and scalable as possible and help you operate and pull the data you need in an agile manner. To have the most efficient advice process, you should expect a good level of customisation to fit the tools to your needs, not the other way around. Being able to program the software to show you the data you need and intricate analytics allows you to make the best decisions for your clients’ financial plans.

End-to-end financial planning solutions

Some firms may use or be seeking multiple tools for their financial advice process, but there are numerous benefits to implementing an end-to-end financial planning solution. From cash flow modelling and risk profiling to review and stress-testing, having one financial planning solution that can perform every step of your advice process gives you a huge advantage over the competition - especially if the features talk to each other, inform your plan and update in real-time.

Read our blog about streamlining your tech stack and how EV offers an end-to-end financial planning solution for advisers.

Meeting your financial planning compliance requirements

As mentioned earlier in this guide, changes in regulations for advisers have put firms under pressure to meet new financial planning compliance requirements. Software solutions should empower your compliance processes and make it easier for you to meet reporting requirements and demonstrate advice suitability.

With auditability a must for advisers, having tools that can track your actions and analysis for full transparency will save you a lot of time and reduce the risk of errors and breaches of regulatory compliance.

Financial planning compliance checklist

It’s important to be clear about your financial planning compliance requirements and, therefore, understand how software solutions you’re looking to implement can support your firm’s compliance capabilities, improve them or whether the software may expose you to any risks.

We’ve put together a checklist blog outlining key compliance considerations and requirements for advisers: Financial Planning Compliance Checklist: Ensure Your Software Doesn’t Expose You to Risk

What is the best financial planning software for advisers?

This is a difficult question to answer. There are no one-size-fits-all solutions, so the best financial planning software for advisers will vary, depending on your business needs, size, profile, client base, etc. The best financial planning software for individuals and IFAs might not be the most suitable for large firms, as you’ll have different priorities and requirements, from scalability and cost-per-seat considerations to functionality and level of support.

The right financial planning solution for your firm will be the one that’s most suitable for your unique needs, that ticks the most boxes when it comes to the key considerations and benefits mentioned. During your selection process, certain software vendors will score higher or more closely meet your requirements than others, across different factors and criteria. With one vendor, you might have to compromise on something that is a high priority, and therefore this could rule it out of your consideration, whilst another might be out of your budget range. It’s about what’s the best fit for your firm.

Judging the best financial software for advisers goes beyond cost-comparison, user ratings or technical spec - although these are important - you need to map your needs to prospective software’s solutions, capabilities and suitability for your firm.

Introducing EVPro: Game-changing financial planning software for advisers

There may not be a one-size-fits-all solution for advisers, but with EVPro, our newly launched suite of adviser tools, we think we’re not far off it.

Financial planning is made simple with EVPro, as our end-to-end financial planning software enables you to consolidate your data and streamline operations. The result? A holistic solution to manage all your processes in one place, to deliver efficient and suitable financial plans that are easy for your clients to understand and aligned to their risk profile and key objectives.

Watch this short video to get a quick overview of our newly launched product and how our full-service financial planning software works.

Why choose EV as your financial planning software solution?

EVPro is a powerful adviser toolkit that delivers a complete advice journey. Our software boasts a range of great benefits to improve your performance, efficiency and compliance, and help you ensure clients get the best financial outcomes. Here are just some of the key benefits of EVPro:

EVPro’s tool features at a glance

EVPro comprises five integrated modules that, when combined, help you deliver a complete advice journey to your clients, including:

Risk

This client risk profiling tool consists of various psychometric, behavioural and knowledge-based questions, plus data gathering around ESG preferences. Here’s what it includes:

Growth and Income objectives questionnaires
ESG questionnaire to learn preferences & concerns
Attitude to Risk, Knowledge/Experience, Capacity for Loss & ESG outputs
Inconsistency checks for in-journey validation
Separate results for joint life plans

Invest

EVPro Invest delivers comprehensive analytics tool for your clients' existing investments to help you to create investment solutions that meet your clients' financial objectives and risk appetite.

Term-based risk profiling
Firm-specific risk benchmarks
Multi-layer fund risk profiling
Risk rating methodology for Growth and Income objectives

Goal

With EVPro Goal, you can easily create and communicate cash flow plans, covering all life stages. Clients get a clear view of their plans and how they’ll meet their financial goals, showing:

Capacity for loss
Likelihood of meeting expenses
Expenses met
Asset adequacy
Integrated risk suitability
Realistic annuity pricing
Enhanced calculations

Solver

Our problem-solving solutions, powered by our stochastic asset model, allow advisers to add more value. The tool uses automation to solve client issues quickly and efficiently, including:

Optimisation solvers to find the best possible plan
Rapid plan stress tests including factors outside clients’ control

Review

Our financial planning software also includes a client review tool to analyse, amend and communicate your clients’ financial plans with an easy client management framework.

Oversight to identify any issues with clients’ financial plans
Regulatory considerations to understand the overall risk position

To see the key features of our advanced financial planning software in action, book your free demo, and get early access to EVPro’s range of adviser tools.

Learn more about EVPro

If you’re interested in learning more about what EVPro can do, how it works and how our financial planning software for advisers could transform your processes and performance, take a look at our dedicated EVPro page.

Financial Planning Software to Meet New Industry Demands