Paul Moran

Investors are making irrational asset allocation decisions based on inaccurate recollections of past performance, reinforcing the value of professional advice, according to new research by Dr Paul Moran, Founder of iFactFind and Principal of Moran Partners Financial Planning.

Presenting at the Financial Planning Association Congress in Sydney on Wednesday, Dr Moran revealed the findings of his doctoral research on the relationship between investor beliefs and financial decision-making.

“The most important factor in investment decision-making is people’s perception of past performance and most of the time that perception is poor or just plain wrong,” Mr Moran said.

“When asked to choose the best past performer out of superannuation, Australian shares and residential real estate, more than 60% of people got it wrong yet they indicated that past performance was a significant factor in their asset allocation decisions.”

The research also found significant differences in investment preferences, depending on how questions were framed.

When asked to select their preferred asset class out of superannuation, Australian shares and residential real estate based on past performance, 38% of respondents chose Australian shares, 33% chose real estate and 26% chose superannuation.

When asked to select their preferred asset class based on their expectations of future performance, almost 48% of respondents chose Australian shares, 18% chose residential real estate and 33% chose superannuation.

“People can give very different responses to the same question, depending on how the question is framed, therefore, relying on a one dimensional, mean variance approach to assessing risk tolerance without consideration for investor beliefs and perceptions about risk is dangerous,” Mr Moran said. The research poses challenges for proponents of digital advice as the key solution to the advice affordability and accessibility dilemma.

“If clients don’t know what they don’t know, and digital advice platforms only ask questions designed to obtain a pre-determined outcome, otherwise called an algorithm, it is questionable how much they can really help,” he said.

“Problematically, people typically use digital experiences to obtain pleasurable outcomes, like buying clothes and concert tickets, but not for things like life insurance and topping up super, which doesn’t help solve the advice access issues.”

Dr Moran’s research was based on an online quantitative study, completed by 280 randomly selected participants sourced through social media, mainstream media and an Australian financial planning body. Half of respondents had an ongoing relationship with a financial planner.

Other insights included a very poor understanding of risk and return among consumers, despite the sample being identified as financially literate.

“The research reinforces the importance of having an experienced adviser to help guide clients to make smart decisions,” he said.

“It also highlights the importance of incorporating some questions about client beliefs in the discovery process, albeit it subtly so not to reinforce these misconceptions.”

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Taylor, who previously led the Asia Pacific division of global event automation platform, Certain, will spearhead iFactFind’s transformation to a modern Software as a Service (SaaS) business and foray into New Zealand’s financial planning market.

He will also drive the group’s business development strategy and work with financial advisers and Australian Financial Services Licensees (AFSLs) to deliver practice efficiencies.

Taylor will report to iFactFind Chief Executive Officer, Dr Paul Moran.

“iFactFind is poised to continue growing, as more advice businesses move from static paper based fact finds to dynamic digital solutions that enable them to enhance the client experience, collect real-time client information and gain deeper insights to inform their advice,” Dr Moran said.

“Bill is a highly respected, experienced IT professional with over 15 years’ experience, and we are excited to have him on board at this critical time for the business.”

“Tech start-ups often wait too long to appoint senior people in the right roles. We are investing ahead of the curve to ensure the right structure and processes are embedded to support the consistent, efficient delivery of our products and services.”

Established in 2018, iFactFind is a cloud-based digital fact find that helps financial advisory businesses efficiently gather, manage, and securely store client information.

iFactFind currently has two-way integrations with providers including Xplan and Worksorted.

Mr Taylor said the easing pace of structural and regulatory change in financial services, coupled with ongoing economic uncertainty, created opportunities for advisers to actively engage with clients and build strong businesses.

“Across every industry and sector, technology is playing an increasingly important role in driving customer engagement and strengthening client relationships,” he said.

“Our goal is to help financial advisers and their clients benefit from this trend too. As we continue to grow and gain momentum, we want our clients and business partners to be confident that the right structure, governance and processes are in place to ensure ongoing investment in our solutions and client proposition.”

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Paul Moran

Financial planning technology companies, iFactFind and Worksorted have entered a strategic partnership to integrate iFactFind’s digital fact find solution and Worksorted’s CRM system to facilitate the transfer of client data and drive efficiencies in advice practices.

The integration provides one of the first two-way synchronisations of client data.

It is estimated that the integration could shave 1-2 hours off the time practices spend each day manually re-keying information and correcting data entry errors.

According to Dr Paul Moran, co-founder of iFactFind, technology providers need to work together to simplify advice processes and make life easier for advisers.

“There is so much regulatory, structural and economic change that advisers need to think about. They shouldn’t have to worry about systems integration and maintaining accurate client data too,” he said.

“Advisers use multiple systems to deliver advice so it is imperative to have technology that talks to each other to maximise efficiencies and manage ongoing compliance obligations.”

In addition to Worksorted, iFactFind facilitates data feeds to other technology providers including Xplan.

Worksorted’s solution provides CRM, workflow and revenue management capabilities, specifically designed for financial advisers. It is used by over 300 financial advisory businesses. Worksorted Chief Executive Officer Simon Betchley said the iFactFind relationship pushed the group’s number of integrations to 15.

“Integrating with best-of-breed technologies, both inside and outside of financial services, is an ongoing focus as we seek to deliver streamlined advice processes and higher client engagement,” he said.

“As the operational heart of our clients’ businesses, we want to continue providing solutions that increase operational efficiencies, reduce double-handling and delivers the best user experience possible. This new integration is another example of how Worksorted is adding real value and removing key pain points for advisers.”

Designed to be a living document, iFactFind is a cloud-based solution that efficiently gathers, manages and securely stores client information.

“Our goal is to help advisers to improve the quality and accuracy of client data, enhance the client experience and boost practice efficiency,” Dr Moran said.

“If that means facilitating data feeds with the other tech providers then we are willing to do the work to make it happen.”

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Paul Moran

Melbourne-based financial planner, Dr Paul Moran, has teamed up with database expert, Mr Sahil Matta, to develop Australia’s most comprehensive, interactive digital fact find.

Designed to be a living document, iFactFind is a cloud-based solution for financial advisory businesses to efficiently gather, manage and securely store client information.

Developed during Victoria’s extended COVID-19 lockdown in mid-2020 and piloted by a select group of advice practices, iFactFind is proven to increase the quality and accuracy of client data, enhance the client experience and boost practice efficiency.

It also supports businesses to meet their legal and ethical obligations including Standard 5 and Standard 8 of FASEA’s Code of Ethics, which requires client records, including those of former clients, to be “kept in a form that is complete and accurate”.

According to Dr Moran, co-founder of iFactFind and principal of Moran Partners Financial Planning, the majority of advisers still rely on manual, paper-based fact finds or editable PDF solutions, which provide static point-in-time information, therefore, exposing businesses to significant compliance risk.

“The onus on advisers to know your client aims to ensure that people receive advice that is appropriate for their situation and needs. As such, quality advice hinges on access to rich, accurate client data,” he said.

“As anyone who has been in a long-term relationship knows, things can easily go wrong when you start making assumptions and taking things for granted. The advice relationship is no different. For most people, life is busy and complex with lots of curve balls. This means advice processes need to be dynamic.”

Developed with new, prospective and existing clients in mind, iFactFind can be securely accessed online by clients, advisers and support staff. It maintains an auditable record of every entry including the date and time changes were made and the person who made them.

For new and prospective clients, there is built-in Financial Services Guide (FSG) delivery and confirmation functionality.

The entire process, which includes goal setting and a risk tolerance questionnaire, can be completed in around 40 minutes, if the client has all the necessary information handy. For existing clients, information can be easily updated, clarified and confirmed, giving advisers confidence that the basis for their advice is sound.

The need to print, post, scan and physically store documents is eliminated.

Mr Matta said Victorians had keenly felt the impact of COVID-19 and continued to face challenges, however, the ready availability of practical, easy-to-implement technology solutions like video conferencing and digital fact finds made it possible for advisers to continue operating and even growing their business.

“iFactFind can be used in face-to-face meetings or via Zoom or clients can complete it by themselves. It is a collaborative tool that fosters open communication, transparency and trust,” he said.

“In recent years, the concept of a technology stack has become a hot topic in financial planning, as licensees and advisory firms look to technology to help drive practice efficiencies and client satisfaction and manage the mounting compliance burden. While there isn’t a silver bullet, iFactFind can be the single source of truth regarding client details.”

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David Heather

Melbourne-based advisory firm Moran Howlett Financial Planning has become the latest boutique to launch a managed discretionary account (MDA) solution, which will ultimately see it phase out traditional wrap platforms and clunky SMSF administration software.

The firm, which has approximately 350 clients and $160 million in assets under advice, has signed a deal to integrate the MDA solution of managedaccounts.com.au following an extensive investigation process which involved four other parties.

Moran Howlett Financial Planning will transition the majority of funds under advice onto the MDA structure over the next few years.

The self-licensed practice, which was established in 2012 through the merger of Paul Moran Financial Planning and Personal Wealth Advisers, is run by principal advisers Paul Moran and Cameron Howlett. It currently uses Westpac’s Asgard platform, Macquarie Wrap and SMSF software provider, Class Super.

According to Moran, who is a Certified Financial Planner, SMSF Specialist Adviser and former Australian Financial Planner of the Year, the MDA solution will dramatically reduce the firm’s administration workload, boost efficiencies and lead to enhanced returns for clients through lower administration costs. “As a mature business, we needed to go up another level in terms of efficiency and an MDA solution will deliver that efficiency plus greater flexibility,” Moran said.

“Over the years, platforms have been useful but they don’t incorporate term deposits into their models, and their integration of managed funds and shares is weak. As a result, we’ve been managing over 400 individual term deposits which are monitored and renewed with ongoing client correspondence.”

“Our clients automatically expect us to make those sorts of investment decisions on their behalf and they don’t understand why we have to keep asking them. It’s our single biggest administration burden.”

However, the group’s new MDA solution will remove that burden. It will be able to build enhanced and more comprehensive investment portfolios and make discretionary changes with the potential for improved returns due to lower administration fees and more timely management.

Moran believes that interest in managed accounts will accelerate in the next six to 12 months, as the debate moves away from commissions and regulatory reform to focus on client service.

The failure of the major platform providers to deliver promised managed account capabilities will only fuel the movement, he said.

“I’m not confident the big platforms will be able to deliver the right functionality because platforms try to be all things to all people and that naturally involves compromises,” Moran said, adding that managedaccounts.com.au’s partnership with global technology giant SS&C was a major determining factor.

“managedaccounts.com.au weren’t trying to convince us that they would build the technology we needed,” he said. “That was a good thing because, in our experience, everyone promises stuff they can’t deliver and certainly not in a reasonable time frame. When they do finally deliver it’s never what you expected.”

David Heather, CEO of managedaccounts.com.au stated ‘’We are pleased to have been selected by Moran Howlett to deliver a managed account solution. We are particularly pleased that our ability to create a solution specific to Moran Howlett’s requirements has been the key criteria in managedaccounts.com.au being selected.’’

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