Financial advisers will be able to do psychometric-style
profiling of customer expectations using a new software package
launched this week in an attempt to help prevent product
mis-selling.
The product, Adviser Office 2 from 1st Software, includes a
"risk-profiler" feature to help IFAs assess a client's appetite for
risk and measures this against their expectation of a return on
investment before recommending a suitable investment
portfolio.
With fierce competition in the financial intermediary market,
through which the majority of products are sold, IFAs are under
pressure to reduce costs and ensure products are tailored more
closely to customers' needs.
In the wake of recent financial mis-selling scandals at firms such
as Equitable Life, many IFAs are struggling to secure professional
indemnity insurance to protect firms against having to pay hefty
legal costs in the event of a dispute with a customer.
"The Client Investment Risk Profiler should help to reduce the
risks financial advisers take," said Rory Cullan, managing director
of 1st Software, whose products are used by 40% of the larger IFA
firms. "For the first time we have bought psychometric profiling
onto the market," he said.
The other main problem faced by IFAs is the need to remember
multiple passwords when doing online business with product
providers. Research suggests a typical independent financial
adviser has to access more than 10 different financial extranets
every day, each with its own log-on and password.
One alternative is digital certificates, which can verify an
adviser's identity, removing the need to remember passwords.
A digital certificate service for the life assurance and pensions
industry is making steady progress, and earlier this year it
signed-up its 1,000th customer.
The Unipass digital certificate service, developed by industry
standards body Origo, is now being rolled out to all of the UK's
financial advisers following its launch last September.
More than 1,000 individual customers and six financial services
providers, including Standard Life, Norwich Union and Friends
Provident, are now using the service, and a further 13 financial
services firms plan to implement it during 2003.