The Limits of Digital Fact-Finds: Highlights from the December Investment Forum Part 2

I suppose it was just an observation on the back of something that Alan said about the “one truth”. I’m all for electronic fact-finds, anything that makes the process more streamlined, easier for clients. My experience has been when that information has gone into a back-office system– and I occupy a cashflow world– is that when that information is then imported into the cashflow, if it’s gone into the back-office incorrectly, what we’ve got is a cashflow that’s incorrect.

And my experience tells me that because the cashflow software and Ray yours is an example of that does a brilliant job, there’s an assumption that the cashflow is then correct. And it’s just an observation that there’s a danger that without some sort of sense-check it at some point we may have cashflows out there that that are not fit for purpose. And Alan will tell you I’m a huge fan of cashflow, so how do we mitigate or deal with that issue?

It’s another great question because, and it’s a challenge for me as a software business owner, advisers say to me, “I want to press one button and just integrate”. And I won’t do that because they’re not looking at the data. So, I have to battle with people all the time where they say, “Oh no, no, the integration should be easier”. So we built a wizard where they literally have to go next, next, next 10 times. And what they’re effectively doing is they look at the front page and they have to scan over and say, “yeah, that is correct, next” because they’re physically then looking at it.

Because otherwise in the early days we had people just saying, “Oh, I pushed it in but I don’t think it’s worked so I pushed it in again”. And before they know it they pushed the fact-find information in three times and they had three state pensions. Because actually they weren’t looking at what they were pushing in. So I had to set up a wizard to say, “no, no, you’ve got to look at it, guys.

This is the information either in your back office, which you want to push to the cash flow, or in your cash flow which you want to push the back office. You’ve got to look at it and press next and look over it”, and it only takes three or four minutes, but that’s a challenge for me as a software owner, just making advisers read what’s on the screen before they click next.

We’ve already discussed about the advantages of fact-find completion quite a lot. I think if we just move to the, disadvantage, I’m a big believer that there does need to be that interaction afterwards as Jane mentioned before. Which is that interaction of going through a fact-find with a client making sure it’s correct, but also pulling out any information that they may have missed by not completing them on the system.

I do believe that the piece of technology that you get the client to complete the fact-find in is vitally important in terms of ease of use and ensuring that actually does pull out the correct information from clients, but clients will miss things. It does happen. And also advisers do as well, so you have to use the technology to work both ways.

For me, I’m a very big believer in that it does have to come hand in hand. Get the technology– there’s no point in you sitting in front of client, I totally agree, it’s madness in terms of getting their address and their NI number, their assets and their job, that makes sense in getting that completed, but just go into it a bit more, the soft back detail with the client after that is vital, but you definitely use technology hand-in-hand with the adviser which is how we work.

Well, I’m not, I’m not sure they’re disadvantages. I think they’re just things that people need to be careful of. So we flagged that stuff.

We haven’t seen in our sector a hundred percent adoption of something like Unipass MailLock. So we have to be careful that we’re sharing private and personal detail around open emails. We all understand what the cyber risk issues are. That’s why I like systems when I’m working with a firm to talk about suitability processing. I like to work with firms and suppliers where you’re filling information in, on the suppliers’ system, as opposed to filling information in and then sending it through in a different format. I think that’s really quite important.

And again, I go back to this point for me, which is that it’s all about integration. You can have every efficiency that you like, but if you’re trying to run your business on three or four different systems, all of those economies go out the window. And what you’re doing is to a certain extent is you’re wiping out all of those efficiency gains, but more importantly, you’re taking responsibility for inaccurate information in a book of truth. So maintaining that single record of truth for me is kind of like the key watch word.

Although I’m a great lover of digital onboarding, to me that’s just to take away the pain points. I don’t think you can replace face-to-face meetings or Zoom meetings because that’s where the skill of the adviser can turn those hard facts into what the client potentially needs to do from an advice point of view. So to me, it’s just saying, “let’s streamline that and let’s use technology to our advantage. So I can then get on and have the conversation with the client and help them achieve their goals.”

And just touching on what Alan said, yeah, I absolutely agree. One of the frustrations for me with my adviser hat on is that software providers want to ring-fence the client and not share the data. With my software hat on now, I want to do the complete opposite. You know, there’s another software, cashflow there called Voyant. You would probably assume that Voyant is a competitor and obviously they are, but I think it’s a great bit of software. I really, really like it. And behind the scenes, I’ve spoken to my team about integrating with Voyant.

So if somebody wants to use CashCalc for the digital onboarding of the client, but then they have this client and they say, “actually, I’d like to do a cashflow with this client in Voyant” bang, send the data across. Okay. And then when they’ve done, come back to me maybe to push something else. And I think we’ve got to have confidence in our software that we’re adding value somewhere along the chain. So we’ve got to integrate with each other, you know, and that’s why with CashCalc, we have no tie-ins– only stay using us if we’re adding value in your business today, at the moment we stop adding value, leave us and go to somebody else. And until all of the software providers get that attitude, then they’re always going to try and ring-fence and say, no, no, no, put it in once. You never have to key it again.

I use Microsoft Office for my emails and I use Gmail for my diary. So for this invite today, Ian sent me an invite on Teams, which is Microsoft. And I popped it straight into my Gmail diary. They’re two competitors, but they accept that they talk to each other. We have to do that as well.

The truth is, I don’t really know what Nirvana looks like. I don’t know if anybody does, you know. I think Richard Braidwood said end to end automation of the fact find solves this problem. And it does, it’s just, my experience has taught me that sometimes a back-office system puts information in one box that you think is the right box. And then when it pulls through to the cashflow, it’s in an entirely different box.

And I can give you an example of that Ray, apologies for using the name of a competitor, but IRESS and their XPlan back-office system. They had two or three places to put the life insurance amount of cover, but there was only one place on the cashflow. And if you put it in the wrong box in the back-office system and import it, it doesn’t appear. And the state pensions, for example, could quite often be duplicated. So you would end up with two state pensions. Now, I’ve seen an example where a planner said to me, “John, I think this cashflow is wrong.” And the net asset value at the end was 94 and a half trillion pounds. You think it’s wrong? And that was purely from an import.

There was lots of duplication in that, I mean, “I think” was the bit that scared me, but the point being is what does Nirvana look like, Kate? I genuinely don’t know because it relies on all of these things. So at one end, whoever was typing it in, did they put the right figure in or the right decimal point? Did it then get captured in the back-office system, in the right box, so that then the right correct feed-through is captured– that’s for people like Ray.

Well, open banking I think is absolutely going to change everything. I’ve been looking at it for over two years and resisted doing the integration because my genuine feeling is that the providers weren’t ready for it yet. Never mind the public, the providers weren’t.

But actually I took a decision recently that they were probably close enough to be ready. I signed a contract with an open banking provider. And as I speak, I’m looking at my computer now, the ninth, we’re going live on the 17th of this month with an open banking integration. So eight days time. So at the moment I’m being copied into emails about 20 times a day between my developers and the open banking about building it. At the moment it’s coming across as 179 different categories, which we need to somehow get down to housing, personal, etc.

To give you an idea, we did a test run last week and my member of staff ee mobile phone bills somehow was going into transport. So it’s certainly not perfect yet. And I think the initial take-up from the public will be slow, but once advisers adopt it for themselves and start saying to their clients, “come on, you can do this,” it’ll be an exponential growth.

And I think we’ll look back in probably 18 months time and say “what you don’t do open banking to give all that information, you’re manually typing it?” So I definitely think Peter, it’s going to transform. As for the pension dashboard and putting my NI number in, that is Nirvana. And I can’t see that happening for years. I’m sorry. But we’ll get the bank bit done fairly quickly.

Open banking is something we as a business always looked at from a budgeting perspective where our idea for a client is that they’re able to log onto one site and view basically what they’re worth. So pulling in their investments and their pensions from providers by evaluations and using the banking integration.

So we’ve been using Yodlee for some time now to bring in people’s banking and credit cards. And then we expanded that to try and look at it from a budgeting perspective for clients, such as how much you spend on holidays, how much you spend on food. And it was one of the things that I personally used it for where you teach the system as you go along because it wouldn’t always recognize it. What’s quite exciting for me now, as part of that integration is what the next is to step help us as advisers.

So what I’m saying is there are advantages to clients, things such as a cracking tool from a company called Visible Capital, which was sucking all the information down out of the bank and automatically completing expenditure when we’re in a fact find, which is really exciting because you probably can’t get more accurate than that. But then you start to look at it and go, “well actually, can you start to look at things such as life insurance premiums coming out someone’s bank account and identify that or investment savings that are coming outside of someone’s bank?”

And I think the thought of it is pretty exciting, but the key is the system learning what the actual expenditure is and how that might take a little bit of time. But it’s some of the things I’ve seen from the tools that I do think can save us a significant amount of time.

Our system has a 95% accuracy on first pass, across all the major banks, we have over 21 banking connections. With respect to the point about the system learning, you’re never going to get a hundred percent accuracy, but 95, is great. And you tend to pick up all the major expenditures on that.

And I guess, another couple of points, with respect to the conversation about the end to end automation. This is really about getting an accurate data set. So if you can, you use open banking to look at the transactions, but also bring in other types of data like pensions, bonds, ISAs, that kind of thing, and save the client time, save yourself time and have an accurate data set has got to be beneficial to the advisory process.

I’m not going to talk in the same form as Jamie and Ray about the technical aspects of it. I’d just like to talk about the human aspects of it. My son’s 27 and I’m 55 and I’m an old g** and, and having all of that information flooding around everywhere, it just makes me really nervous. For my son, who is in skinny jeans and Chelsea boots and works in Brighton, there’s no problem with it. That’s just the way his life is now. He has no fear about any of his data because he’s never really questioned security. So it’s just an observation from me that as Ray added, really well put, right at the start, this will become the norm.

I think the question is whether or not, the digitization of process forces that change or all the processes just need to wait until the old bastards like me aren’t around anymore. And it’s the young people that just adopt this really, really easily. I think the pace of change is going to depend on that.