Back Office Support 

Financial advisers have been told for decades that the future is paperless.  In 2023 we appear to be getting there and perhaps AI (that’s Artificial Intelligence, not Accord Initiative) will help. 

One of the main bridges to a paperless office is an advice firm’s back office system.  Being able to store client data and then access it to deliver advice, client management and extract appropriate MI is critical to efficient practice management.  All too often, however, new information needs to be recorded, or the same data recorded in a different way (PI or Reg Data changes for example) and advisers need to avoid resorting to ‘yet another spreadsheet’ to store this additional data. 

When it comes to recording information on client preferences and objectives, as required under Consumer Duty, having the ability to store client decisions and, crucially, interrogate and extract the data is critical.  Here are some examples of the range and scope of data that should be recorded in a firm’s back office system: 

Consumer Duty:

  • What information was provided to the client to allow them to make an informed choice? 
  • Storing the information (email + attached PDF, copy letter and example document) 
  • Evidence of clients confirming that they are making an informed choice – how is this recorded/stored in the Back Office system? 
  • Recording of a client’s investment/mortgage preference and objective decision 
  • Linking Investment/Mortgage preferences to due diligence 
For investment, ability to easily access underlying investment information to be interrogated against changes to fund strategies (adopting/removing ESG, applying for sustainable labels etc).  This is very important for Target Market assessments. 

PROD: Target markets and Segmentation 

    For ESG, Sustainability and values-based investment, the level of information needed to ensure a firm is aligning client and fund target markets is extensive. To start, the target market is identified by the product provider’s product governance process and includes identifying both positive and negative target markets for the funds (it is not expected that a client would invest in a funds in which they are the negative target market for). Following this, the adviser should then fine tune the target market to reflect their own client base (segmentation).  


    A firm’s client bank segmentation may include groups for:

      • Clients that do not want ESG applied (match to funds that do not have ESG embedded) 
      • Clients that wish to invest ethically (match to funds that invest ethically)  

      • For ESG, Sustainability and values-based investment, the level of information needed to ensure a firm is aligning client and fund target markets is extensive. To start, the target market is identified by the product provider’s product governance process and includes identifying both positive and negative target markets for the funds (it is not expected that a client would invest in a funds in which they are the negative target market for). Following this, the adviser should then fine tune the target market to reflect their own client base (segmentation).  

        A firm’s client bank segmentation may include groups for; 

        • Client wishes to invest in funds that have sustainable objectives (match to sustainable focus, improvers or impact)  

      Sustainable Disclosure Requirements (SDR) and investment labels:  

      There needs to be capacity within the back office system to record individual preferences and objectives and how these link to: 

      • Sustainable labels
      • Sustainable Disclosure statement – the client file must demonstrate how the disclosure statement has been provided to the client and when the next annual update is due for each fund to ensure these are made available to the client 

      RegData:

      It stands to reason that once the SDR come into force, the FCA will want to gather information on how advice firms are allocating capital across the Spectrum of Capital, and in particular the sustainable fund labels.  To avoid reverting to another spreadsheet, a back office system needs to enable extraction of data efficiently, to meet the following potential questions within RegData: 

      • Total amount invested across the sustainable fund labels 
      • Average investment in each label 
      • Largest investment amount 
      • Distribution across providers for each label

      We are currently reviewing what is available from the main back office providers and have compiled a database of those systems that are already ESG/Sustainable/Values based investment friendly. 

      NOTE: We have made a number of attempts to review existing propositions from the main Back Office software providers.  To date, none have responded.  As such, we are not in a position to provide advisers with information on those providers who may have built ESG, Sustainable and values-based data capture facilities.

      If you are using one of the main Back Office software providers which offer some support, which includes using the Spectrum of Capital and dedicated Informed Choice and Investment Preferences and Objectives areas, we would love to hear from you.  Please do email us HERE with any information you would like to share.


      Other back office support 


      Suitability report generation 

      Increasingly technology is helping advisers and outsourced paraplanners firms produce well-crafted suitability reports. These technology solutions need to cover the personalised investment pathways of clients who are making Informed Choices about their investment options. 


      The best technology solutions in this space will be able to accommodate not just the basic ESG options, but also the forthcoming Sustainable fund labels and ethical or other values-based options.  


      Our sustainable back office database also includes firms that have demonstrated a commitment to supporting advisers with up to date information on ESG and sustainable options.