Paul Resnik

Australian businesses invested a record $3.26 billion in software in the second quarter of 2014, reflecting the rising importance of information technology to the economy overall and to the financial services sector in particular, according Paul Resnik, Co-Founder of FinaMetrica, a software provider for the wealth management industry.

Second-quarter Australian National Accounts data from the Australian Bureau of Statistics (ABS) reveal the seasonally adjusted private software spend rose 2.4% to $3.26 billion in the June 2014 quarter, up from $3.18 billion in the March quarter. Spending jumped 8.3% from a year earlier.

The Australian economy grew 0.5% during the June quarter, to be up 3.1% from June 30, 2013. Productivity, as measured by GDP/hour, grew 2.8% from a year earlier and rose 0.9% over the quarter.

FinaMetrica, a leading global provider of web-based risk tolerance assessment tools for the wealth management industry, said greater regulation of financial advisers through Future of Financial Advice (FoFA) reforms has forced advisory businesses to spend money on compliance projects at the expense of investment in new technologies designed to promote business efficiencies.

“Compared to the US and UK, Australian advisers are using less sophisticated technologies and software. FoFA has been the immediate concerns for financial advisers so investment in technology and software to streamline business processes has suffered as a result. Yet it is this investment that can have the greatest impact on a firm’s profitability and its ability to serve its customers efficiently and transparently,” said Mr Resnik.

“Australian advisers, therefore, need to look at cost-saving solutions both for their clients and their businesses. As FoFA becomes less of a pressing concern, we can expect to see more Australian advisers adopt more sophisticated software aimed at achieving greater efficiencies and delivering greater transparency to their clients in the advice process,” Mr Resnik said.

“Our risk profiling system, for example, enables advisers to accurately assess their client’s risk tolerance in as little as 10 minutes. The test, and the automatically generated report, helps advisers better match investments to the needs of their clients. Our software, therefore, helps advisers meet regulatory obligations and, just as importantly, do a better job in delivering suitable financial advice.”

FinaMetrica has recently won several international awards for best ‘Risk Profiling Solution’ at the Wealth Briefing Awards. These awards recognise the best “technology solution to help wealth managers assess and document the risk appetite of clients.” FinaMetrica’s solution is used in 23 countries around the globe, in seven different languages.

“The effectiveness of our risk profiling solution explains its growing global appeal. Wealth managers and advisers are being forced both by market pressures and by regulators to become more transparent and prove their worth to clients. Our tools and materials help advisers to meet these demands and to entrench best practice in the financial advisory process,” said Mr Resnik.

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AdviserLogic improves direct data streaming content.

Financial planning software house AdviserLogic has announced that they now directly receive 26 investment data feeds covering over 200 platforms.

Head of Product Development, Daniel Gara, says “Over the last couple of years, the AdviserLogic team has established direct relationships and worked diligently with the major platforms to ensure our users receive automatic daily data directly from the source. Not needing to deal with an intermediary has improved the timeliness and quality of data that AdviserLogic users see in their client accounts. Our attitude is that if the platform has an existing data delivery method and any one of our advisers want it, we will gladly make the integration happen through our enhanced data feed framework which can construe and process data irrespective of type or delivery method.”

Mr Gara continues “AdviserLogic’s comprehensive daily reconciliation process means that we now boast a very high level of data accuracy – upward of 99.99%. This gives our users the confidence to generate investment reporting and advice documents without needing to constantly double-check data. Advisers love the increase in efficiency which frees them and their staff up for other tasks making them more profitable.”

“Direct access to the source of data has also enabled AdviserLogic users to obtain more data points, including fee data, which is important in the prevailing FoFA environment.” Mr Gara adds.

The AdviserLogic team continue to work with established and new platforms including insurance companies to make data feed processes efficient and will be releasing additional information regarding these developments in the near future.

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Rubik and Revex enter into license arrangement.

Rubik Financial Limited (Rubik), the ASX-listed global provider of financial technology and software, last Friday announced it has entered into a term sheet with Revex Solutions Pty Ltd (Revex), containing an option for COIN to acquire Revex,  and a four year exclusive reseller agreement with Revex.

The term sheet entered into with Revex is non-binding. The parties have agreed to negotiate on an exclusive basis for a period of 180 days to agree full form, binding, transaction documentation.

Revex is revenue management software for Australian Financial Services Licensee’s and financial planning practices offering automated management of revenue, including commissions and client fees as well as relevant business information reporting.  Revex was established by John Brabender, the father of commission and revenue management software, having been the original founder of DMS, which was acquired by Xplan.

Reseller agreement

It is intended that on execution of a full form reseller agreement, Rubik will hold the distribution rights over the Revex software on an exclusive basis for Rubik Wealth’s customers, covering institutions, independent financial advisors (IFAs) and industry superannuation funds, as well as non-exclusive rights for  other customers with Revex continuing to support and market to its direct relationships.

Option agreement

The terms of the proposed option provides Rubik with the option to purchase the Revex business outright, at the end of a three year period.  The consideration will be based on a multiple of revenue achieved in the final 12 months prior to the exercise of the option.  The multiple paid will be dependent upon the source of the revenue.

Rubik Managing Director Wealth, Wayne Wilson, said that entry into the proposed deal would be a significant strategic outcome for Rubik. “Revex software solves the dilemma facing planners in the industry – and offers efficient commission and revenue management that meet the requirements of the FoFA reforms,” Mr Wilson said.

“The reality is that revenue and commission information needs to be collated from each of the many different investment products that clients hold. Often these fees are bundled together, and the task of itemising the fees, and unbundling them to account for those that are FoFA defined, can be onerous.

“Every institution has a different solution to this FoFA requirement. It is a time-consuming exercise that many practices are performing manually. When Revex is integrated with COIN it will provide fully merged FoFA documents, in an automated fashion, at the touch of a button.”

Revex Managing Director, John Brabender, said: “With the competitive and regulatory landscape changing, the pressure is on dealer groups and financial planners to provide cost effective and value add solutions to both advisers and clients. In this environment, technology efficiency solutions become a business focus.

“With Revex, fee management is simply managed and ongoing transactional reports are available enabling integrated transparency for reporting purposes.”

Key features of Revex include:

• Efficient processing of all commissions and fees regardless of source
• Fee invoice management including recurring invoices
• Effortless payment of all entitlements to advisers and referrals
• Extensive management reporting
• Export information to your General Ledger.

“In anticipation of entry into full form agreements, work has commenced on integrating Revex into the various COIN client systems. Rubik expects to have a fully integrated version of Revex available to all clients by November 2013,” Mr Wilson concluded.

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Rated the leading Australian financial planning application in 2012, IRESS has extended its functionality lead over Coin and AdviserNETgain with a vigorous development program though out 2012. \

Apart from FOFA, development has been directed at making complex functionality easier to use in a daily planning practice and supporting online scaled advice client engagement. XPLAN is the first planning application to support client engagement using social media with integration of popular social media platforms and services into their Adviser Desktop.

With the introduction of FOFA this July, planning software development has focussed on FOFA functionality with most applications also further developing risk product support responding to the continued importance of risk to many planners
New FOFA planning functionality took more than 50% of new development effort for most planning applications last year and this is likely to continue through 2013 as planners begin to use a FOFA compliant planning processes.

“Much of this year’s development activity was associated with the development of a client service package model layered on top of existing workflow functionality to generate the data for FOFA compliance.” said Investment Trends analyst Ian Webster

Developers also focussed on risk support and implementing an unusually long list of legislative changes to tax rates, allowances and benefits following the government’s 2012 mid-year budget. AdviserNETgain has continued to lead development efforts to improve planning efficiency.

Leading application developers’ approach to FOFA is based on a client service package model supporting client service level agreements
While some of the smaller developers and some platform aligned applications have taken a wait and see approach to implementing FOFA, the three leading applications – XPLAN, Coin and AdviserNETgain, have implemented similar approaches with client service level agreement based processes providing the data for fee disclosure statement production and “best Interests” test compliance.

“This approach extends an unprecedented level of application monitoring and disclosure to every part of planner’s daily planning activities.” says Ian Webster. “The introduction of client service package based planning is likely to be as significant a change to planners’ activities as the introduction of Approved Product List functionality several years ago.”

The Rubik acquisition of Coin will result in two new planning applications based on Coin Office from two experienced development teams
Following the sale of Coin Office to Rubik, two planning applications will be developed from the Coin Office 4 code base by Rubik and Macquarie Adviser Services to support new approaches to advice provision by institutions and the broadening market for advice provision. Rubik will develop a Coin based planning application for institutions and its international clients while MAS will develop Macquarie Visor for a range of IFA advice provider markets.

“Despite industry consolidation, planning and advice application development is now more vigorous than it has been since the first half of the previous decade.” says Ian Webster. “Scaled advice and direct to client applications will be the focus of planning application development in 2013.”

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