How the OPAL Planning tool helps achieve client goals

Ortec Finance is not a well-known name in the UK adviser tech market but perhaps they should be?  

In recent years they have attracted some highly prestigious clients including Fidelity and most recently St. James’s Place (SJP) where they are providing their tools to help support adviser’s full investment journey (including onboarding, risk profiling, client reporting and portfolio & goal monitoring) using their wealth and cashflow planning (stochastic) web-based system.

Ortec are providing major components for the technology roll-out SJP are undertaking with Salesforce, incorporating both their Financial Services Cloud and Einstein artificial intelligence engine. This is a very significant solution to be part of as it is part of the largest deployment of Financial Services Cloud to the UK wealth market to date.

OPAL, Ortec’s flagship planning tool looks to assist advisers in modelling their client’s assets, liabilities, income, and expenditure to create a goal based financial plan. This highlights their client’s potential future net worth and expendable income as well as support any necessary investment decisions.

In addition to the wealth and cashflow planning functionality, the tool looks to help advisers assess their clients risk profile both on a goal basis and risk tolerance (the clients’ capacity for loss and the risk required to meet their goals).

Information held on Salesforce is automatically updated in OPAL however, this is not yet a two-way integration, something we would have like to have seen, so that all updates made were also reflected in Salesforce.  Whilst prepopulating OPAL with client data from Salesforce is currently a one-way integration, Ortec have confirmed that it is their plan to extend updating client information to a two-way integration. Monitoring information created in OPAL can however be pushed back to the Salesforce monitoring dashboard.  Other completed data integrations with systems and software solutions are Dynamics, Avaloq, Temenos, Objectway (Eximius), SEI and Sopra.  For any other systems, integrations would need to be built.

OPAL currently offer three API module options (Wealth Planning, Financial Planning and Optimiser & Automated Advice) that can either be hosted in a private cloud (SaaS) or on premise to Financial Institutions.  The three API modules can be integrated into existing architecture, enabling firms to build their own front end.  An example of this is VisualVest a digital asset manager based in Germany.  Additionally, to support a hybrid solution, Ortec offer a data services API.

The Wealth Planning API can be used to simulate one or more investment accounts.  The API returns results in scenario context regarding capital development, goal feasibility and risk & return characteristics.

The Financial Planning API is an extension of the Wealth planning API and can be used to simulate the entire financial situation of a client.  This API returns results in scenario context including capital development, goal feasibility, risk and return characteristics of investment accounts and cash flow projections.

The OPAL Optimiser is a calculation tool that solves a broad range of optimisation problems considering multiple goals, multiple accounts, and multiple input parameters. The Optimiser supports automated advice by calculating the value of one or more fields in the OPAL request, such that a certain result is reached, maximised, or minimised.

Once logged into OPAL, users can search for clients, explore client’s financial insights, and analyse any potential improvements compared to the client’s current situation.  Analyses can be made both on client level (financial planning) and on portfolio(s) level (wealth planning).

The tool is split into three main areas:

1. Client Data – Users can add, amend or view a high-level overview of their client and, where applicable, the partners details.
2. Current Situation Dashboard – for each client you can view their current situation, broken down into four separate areas:
1. Capital
2. Cash flows
3. Goals
4. Risk and Return
3. Analysis Management – this is where users can create analysis to compare against the client’s current situation.

Under the Capital section users can view, add, and amend their client’s assets, and liabilities as well as any pension products they might have.  Once details have been entered users are given an overall analysis of their capital, in both planning and economic scenarios.  Something I particularly like is that even though pension products are measured in the client’s overall capital development, they can also be viewed in isolation.  Within the Cash flows section users can view, add, and amend their client’s income and expenditure details.  

Whilst the system does not provide Annuity quotes it does offer the option to either manually enter an annuity or have OPAL calculate the factor.  When calculated automatically, the annuity factor is based on survival rates (based on a mortality or actuarial tables), interest rates and possible surcharges for costs.  As there are a number of external annuity comparison engines available this is another enhancement Ortec may wish to consider in the future.

The stochastic modelling is presented using visual aids to help provide insights into the development of risk, return and goal feasibility.  All projections provided reflect National Insurance, Income Tax and Capital Gains tax; however, Inheritance Tax (IHT) is not yet currently included.  We would like to see IHT being included in the future as this would help advisers when providing intergenerational planning.

Ortec feel that the main component of the tool is the ability to translate clients’ personal goals into an optimal investment plan and monitor these goals over time.  The main dashboard highlights the goal feasibility over time using a percentage figure (the number of economic scenarios in which the goal is achieved).  Goals are automatically set up based on income and expenditure details entered in the cash flow plan (for example meeting basic expenditure).  Additionally, expenditure and capital goals can be entered manually using the pre-set goals available (for example additional income, stop working early, buying a house, travelling) or anything else using other.

Users are also able to define the amount, frequency, and period of client’s goals as well as link the goals to one or multiple assets/accounts.  Within each goal the user can assess the clients’ capacity for loss based on their assets, liabilities, income, expenditure, and importance of the goal.  When setting a goal, users can set a priority by selecting a star rating from 1-5.  The system will look to achieve goals in order of the date set (when they occur) however, if goals are set on the same date, the system will priorities them based on their star rating.

I like that if the user is creating a future goal where ongoing income is required, the system enables them to model changes in the income levels.

As part of the onboarding and fact-finding process Ortec offer their own 35-question attitude to risk questionnaire.  Outputs from other risk profiling providers/solutions can also be taken as input should firms already be using alternative solutions although this may require a mapping exercise.  Ortec confirmed that the complexity of this exercise depends on the questionnaire and tool.  However, they have not yet encountered any difficulties.

Whilst the risk tolerance test is carried out at a client level with scores stored against the client record, users can also assign them on a goal level as well.  The client can then decide the level of risk they are willing to take with one or multiple accounts.  Risk and returns are shown on a plot graph highlighting the clients overall risk spread.  The green line indicates the clients “risk line” (the clients risk attitude/willingness).  The size of the risk bubble indicates the proportion of the client’s assets invested within a particular risk category.  In addition, OPAL shows the aggregated risk of all investable assets versus the client’s risk appetite.  The individual investment risk levels (of the client’s products) which are highlighted using a low-to-high meter icon, which I find, are a particularly effective metaphor.  This functionality offers advisers a much more informed view of their client’s attitude to risk as well as an insight into where their assets sit in relation to this.

Through the analysis management tab users can add ‘what-if’ comparisons which will not alter the current situation.  Currently users are unable to compare situations side by side and would need to switch between dashboards to compare.  We would like to see Ortec provide this in the future as it would help the adviser to compare plans against each other and also demonstrate the value of their advice to their clients.

In addition to the cash flow planning element, OPAL offers investment decision support.  For individual investment products users can see how improving the risk and return characteristics might increase goal feasibility.

Product risk and return analysis takes users through a Five-stage process where they: select an investment product, select portfolios, compare the portfolios, analyse the impact on overall results, and then finalise.

After selecting investments and portfolios users can compare their client’s current portfolio against the recommended portfolio.  Users can select from pre-set portfolios (these have to be set up by Ortec) or select/create custom portfolios.  They can then select compare, where users are given an overview of their client’s current portfolio in comparison to other portfolios (of varying risk levels).  The goal feasibility, returns, risk, potential annual losses across all the portfolios can be viewed all on one screen all with the aim of supporting advisers with their investment decisions.

The system will also compare each risk profile showing volatility in the X axis and feasibility of each goal in the Y axis.  It then shows the client’s goals to highlight the likelihood of them being achieved for each risk profile.  This aims to supply advisers with an insight into which risk profiles might be able to achieve the given goal and whether adjustments to the client’s assets and underlying holdings are needed.

Product Risk Analysis – Six Stage Process

Click to enlarge and scroll to view all stages

Once a new portfolio has been selected, the advisers can add any additional notes and download a report to send to their client. All reports are saved in the OPAL archive, against the client file.

Product Comparison Report

Click to enlarge and scroll to view all pages

The system also allows users to track, monitor and analyse their entire client base’s goal feasibility, investment risk and attitude to risk all within the monitoring dashboard.

One very powerful feature is that every night (in bulk), the system recalculates all the financial plans for the firm’s client base using information from the practice management system or portfolio management system.  The system then updates the individual values, recalculates the feasibility of goals, checks the risk of the products and whether clients are still in line or whether action is needed. 

Advisers are then able to view which clients have a potential reduced goal feasibility and if needed contact them.  From the monitoring dashboard, users can also select individual clients so further assessment and analysis can be performed on an individual basis.

Overall, OPAL appears to have much to offer both advisers and clients, to help understand the feasibility of achieving goals and the potential changes that are needed, either in risk or underlying assets, to achieve them.