The Power of the Back Office

By: Sian Davies Cole
Director
Plan Works

Without a doubt the back office customer relationship manager system is a vital part of any financial advice business. Although the Financial Planner is the soul of the business, the back office system should be seen as the beating heart. Without a fully functioning efficient heart, nothing is going to go smoothly for the business or the client.

Technology has always been a key focus of change in financial planning businesses but especially in this defining year with the shift to online communications only from predominantly face to face. It’s been a wake up call for firms that did not have their back office systems up to scratch and this has definitely caused them to revaluate and power up and take their back office to the next level.

Why don’t firms feel the power?

The predominant use of a back office system is to store client data, however most firms are not using them to their full potential. After all, a spreadsheet can hold client data without a hefty monthly cost! So why aren’t firms making use of all the features and benefits available within some of these back office systems?

In my experience, it is because there has been a lack of desire or willingness to invest in really integrating the system into the firm. These things are complicated! And they require a lot of time and effort to understand! So the easiest and most efficient way to integrate the back office system into the firm is to identify someone to make it happen. Whether that is someone internally or externally.

The best of the best

Although setting up a back office system is easiest when starting a firm from scratch, no one should be put off doing it as you will never look back when you realise how life changing it can be.

Based on my experience of using and implementing back office systems, I have come up with my Top 5 Must Dos when choosing or using a back office system effectively.

#1: Processes sit at number one

Processes are central to an advice firm, especially where there is more than one adviser, to ensure that all advice being provided is following a similar path and will end up with the client receiving a consistent outcome. Documenting processes is absolutely key when it comes to using a back office system effectively. Although the system will have its own way of running a process, it can be manipulated to suit an individual firm and their way of doing things.

Introducing ‘workflows’, which allow individual tasks to be generated and allocated to different members of the firm at different stages of the process allows a high level oversight of activity using Management Information reports. It also ensures that work doesn’t get lost which I have seen happen so often when communicating by email or post-it notes! As long as a firm has a thorough documented advice process, putting the workflows together will be much simpler!

When putting processes together, the most important thing is understanding what needs doing AND who is the best person to do it. This is led by a number of things but mainly knowledge and experience to ensure that the firm is and remains compliant. This emphasises the need for thought in resourcing a firm appropriately or outsourcing to effective firms that can provide the support needed.

#2: Filling the new vacancy is a close second

Setting up and maintaining the back office system requires time investment. If you aren’t willing or able to do that then stick to a spreadsheet! The person taking on this role needs to be a good all rounder: good with data, analytical, a problem solver and, most importantly, someone who will not give up until they make the thing work!

A great back office system will provide some, or all, of these features which allows a one-time data entry point:

  • Holding client personal information
  • Detailed plan information
  • Risk profiler
  • Client fact find
  • Document storage
  • Client portal for message and document exchange and storage
  • Automatic valuations
  • MI reports including new business / advice register
  • Document generation with pre-filled client / plan information
  • Workflow to manage the whole advice process
  • Fee and Income reconciliation.

Appreciation of how long it takes to become an expert user in these features is key. Yes, you can learn how to use the basics in a couple of hours but that isn’t setting anyone up to have full responsibility over the firm’s data and advice processes.

The providers selling these systems do provide onboarding training and even ongoing training. However, the key is having someone you can call on to spend a fair amount of time integrating your firm and the back office system and maintaining it. The size of firm (and complexity of existing arrangements) will determine how much time this will take both initially and ongoing but a significant investment should be considered.

#3: Show me the data

It sounds obvious but the system is only as good as the data going into it.

If moving over from another back office system provider, it can be tricky getting the data migration accurate and there might have to be some acceptance of inaccurate data or just simply excluding a whole raft of data that can’t be relied upon.

When coming up with the firm’s processes and deciding who should do what, data entry should be a key part of that.

  • If using a factfind, who is entering that information?
  • If a risk profiler is being used externally to the back office system, who is entering it and adding it to the file?

There is no right answer. Every firm is different! But the decision makers in the firm need to be clear about who does what and why to make it run in the most efficient way and keep everyone as happy as they can!

#4: Inte-great-tion

Integration with other systems such as platforms and cashflow software should be great! But the importance is in understanding how that is going to work with the firm’s current set up and also any additional costs that might be incurred.

One of the main benefits of having an all singing all dancing back office system is not having to enter a client’s data more than once so integration with any other systems used where data duplication is required is a must!

However, just being able to integrate isn’t enough. You must look under the bonnet to understand the integration.

Is it a two-way integration? If not, it’s really not that valuable. How much time will the integration save? If not much, then again it’s not that valuable, especially if it comes at an additional monthly cost. If you are not sure how much time it will save, ask those that normally input the data if it isn’t you.  

The two main areas of integration are cashflow forecasting tools and valuations:
  • For cash flow integrations, the time cost saving is obvious as this is clear data duplication without an integration. It doesn’t make any sense for a Financial Planner or Paraplanner to be spending their time entering data when they should be focusing on analysing and planning for the client in mind.
  • For valuation integrations to be successful, this really depends on legacy business where considering a back office system for an existing firm. Before making that commitment – ask the provider to specifically look at the product providers you currently have on your books and comment on how many of them would automatically value with their system. With provider amalgamations over the years, just saying that a specific providers’ plans will auto value doesn’t always play out to be the case and often it is only the new ‘platform’ version of the providers’ plans that may work.

The bigger the firm and the more complex the legacy book, the more time investment is required to both set up AND also to maintain the system. Although having auto valuations can appear to be a ‘nice to have’, it is important to understand the whole system. Incorrect values or no integration is likely to have a knock on effect to fee reconciliation.

#5: Get clients involved

Offering clients an online portal to obtain valuations and exchange documents with their Financial Planner was seen as an added extra before lockdown. Now I think we can say that we all see the major benefit of this with face to face meetings a thing of the past and no more a guarantee of a daily postal service.

The only way to make this work efficiently is to ensure that your back office system either is or integrates with your document storage facility, however there should be no need to have an alternative system as the back office should be able to provide everything that is needed.

Communicating securely has always been important but doing it simply often becomes the challenge. With the amount of email scams now taking place I think the need for moving away from emails for conversations with clients is more urgent than ever.

The main benefit of having a client portal built into you back office system however, is the ability for a client to complete or check and update their factfind information. This is the real time saver! Before trying this for myself, I was sceptical about asking a client to fill in a factfind through a client portal. Once I trialled it I was converted. The key is in the design. It felt very much like completing a profile for a social networking site rather than a long winded factfinding document. In my experience, this was much more successful than could have been estimated even for clients who weren’t tech-savvy.

How do we power up?

If you are one of many many firms who have a (potentially) great back office system in place but are not using it to its full potential, figure out who is the best person or resource to make it better for you.

It might be someone within the firm. If that’s the case ensure that they have enough time to dedicate to the task as it will require time and focus.

Outsourcing the task is an option. There any many resources out there that can help you. You just have to find them!

To insource or to outsource is probably the most important decision you have to make. Once you hand the task over to a dedicated resource that you know, like and trust, the next thing you should see is a fully functioning back office system. This is the efficient beating heart of your firm now and for the future.


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