Your third-party usage

Mergers and acquisitions continued at a strong rate in the past 18 months with fund houses, platforms and other third-party tool providers swallowing up or partnering with notable providers.

In terms of integration, this could be a good thing for users, but what of those advisers wishing to use a fully independent approach for integrated tools?

The tables show where Nucleus users state they use specific planning tools in their business. This is not an indication of the offerings from each tool / company.

Fund research

Nucleus users rely on an average of two fund research tools. Many of the fund research tools used also provide a risk profiling tool, which is sensible. FE remain the most widely used option by far and were the only tool within the top five to see an increase in usage. FE’s acquisition of CashCalc is promoted as cashflow being a natural extension of the fund selection process, which is clearly essential. Integrations should allow easier analysis and visualisation of how likely a portfolio is to deliver for a clients’ long-term goals. O&M’s purchase by Iress means, at company level, they cover all of the main third-party tools employed by Nucleus users.

Risk profiling

As you may expect, only one risk profiling tool is used on average, yet there is no dominant risk profiling tool within the Nucleus user base. Satisfaction around the integration between risk profiling and the other tools used in your practice appears to have dropped slightly this year. Only 40% are satisfied with the integration compared to 54% last year, while this saw the highest level of dissatisfaction among users (27%, nearly double last year). We know risk profiling is more indicative than prescriptive when agreeing a client’s investment solution and is more complex than simply matching to a risk score. This feels like an area where more could be done to help align and visualise client goals and solutions.

How satisfied are you with the integration between the risk profiling tools your firm uses?

Back office / CRM

Again, most firms using Nucleus rely on one CRM system and Intelliflo’s solution is by far the most widely used. Like fund research and risk profiling, the back office provider and client portal offers an obvious tie up (proven by client portal usage shown later). Integration satisfaction is in line with last year (53% are satisfied). This shows there is still plenty more that can be done to automate as many of these processes as possible. Of the three most widely used solutions, only O&M (owned by Iress) has a company-wide coverage of all tools.

How satisfied are you with the integration between the CRM tool your firm uses?

Platform comparison

Platform comparison is done with on average two tools. Defaqto is the most commonly used tool, but the Lang Cat (with their platform directory) are only a whisker behind. Platform comparison tools are the ones we might expect to have the lowest levels of integration and that’s reflected in the satisfaction scores, where most responders were neutral about this. That’s not to say it’s not possible – Defaqto, Selectapension and O&M are all providers of other tools for Nucleus users. Therefore the process of getting these tools to talk to one other should be increasingly easy.

How satisfied are you with the integration between the platform comparison tools your firm uses?

Cashflow modelling

Again, most users stick with one cashflow modelling tool, with CashCalc and Voyant leading the way in the usage stats. Both providers have recently changed hands, with CashCalc bought by FE and Voyant bought by US tech solutions provider AssetMark Financial. A combined cashflow tool linked with other software can provide a more holistic view of a client’s portfolio, alignment with goals, income planning and reporting. The use of Timeline (Finalytiq) has started to increase among Nucleus users, whose app is designed to visualise a client’s sustainable withdrawal strategy across retirement.

How satisfied are you with the integration between the cashflow modelling tool your firm uses?

Client portal

Finally, and expectedly, only one client portal is used on average, with Nucleus Go leading the way, closely followed by Intelliflo. There has been an increase in satisfaction of integrations between client portals and other tools, up to 60%, potentially driven by increased usage during lockdown.

How satisfied are you with the integration between the client portal your firm uses?

What drives a review?

As regular census readers will know, there’s limited change seen year-on-year with the third-party tool usage. Clearly if a firm is to rip out and replace an existing solution, this would cause upheaval in retraining staff, business efficiency and consistency. And often, the benefits may not be immediately forthcoming.

So with such disruption likely, it’s clear this is an event driven process where a desire for a better solution, poor service and a perceived lack of value all contribute to a change of plans. This obviously isn’t a decision taken lightly, but with little progress made with the connectivity of tools, something eventually has to give. This is one area in the market where challenger brands or collaborations may enter and cause significant disruption.

What drives a review of the third-party tools you use?

Next… chapter seven

For adviser use only

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Nucleus Financial Services Limited is authorised and regulated by the Financial Conduct Authority, is registered in England with company number 05629686 and has its registered office at Elder House, St Georges Business Park, Brooklands Road, Weybridge, Surrey KT13 0TS. Please note that telephone calls may be recorded in order to monitor the quality of our customer service and for training purposes.