True Potential recently received the following review from noted industry commentator Mark Loosmore from AT8. If you haven’t seen it already here it is below:

Professional Adviser
Mark Loosmore

AT8’s Mark Loosmore begins a series of reviews of practice management systems. This week he discovers a portal with potential.

We use the term ‘practice management’ to describe the various systems that would typically be referred to as back-office or point-of-sale (POS), or customer relationship management (CRM).

The term is used more routinely in Australia where solutions are more holistic, and we are seeing more of those in the UK moving in this direction. So, we will be covering systems that support financial distributors in both the front- and back-office. We will look at packaged solutions and those that allow bespoke work to get the system tailored to the distributor’s exact business processes. We will consider both the budget end of the market and the premium end.

None of the solutions should be considered superior to others, because they all meet different needs. It is the goal of the reviews to help identify which systems may be most suited to particular distributors.

The first system of the series that we are reviewing is True Potential. Rarely has a new system come to market with such immediate prominence. Its impact may, in part, be due to a high-profile management team including David Harrison, famed for making Positive Solutions a success before it was sold to AEGON. When combined with a unique business model, True Potential has gained the attention of potential clients and competitors alike, creating quite a stir.

Broad functionality

True Potential covers most of the functionality required to run an adviser business. To coincide with the articles we are writing about practice management systems, AT8 has written a detailed review and comparison report on the systems available. In this research, True Potential came out as the firm with the broadest range of functionality.

It has a strong set of front-office tools that support the fact find processes and needs analysis, including financial calculators. It also runs its own quote and apply portal (in competition with the likes of Assureweb and Exweb). While the portal does not have the breadth of provider coverage that the rival portals claim to have, being integrated into the business processes within the True Potential solution ensures that an electronic process is seamless. The portal has by far the highest conversion rate in the market from electronic quote to electronic application.

True Potential also includes support for what would typically be seen as back–office capability, such as contact management, commission reconciliation and contract enquiry. It doesn’t yet link to as many product providers for contract enquiry as Adviser Office (more of a market leader for contract enquiry)to support these functions. However, its high profile has ensured it has linked quickly to many of the key players.

The True Potential business model is different from its competitors in the practice management space, because it provides complementary services, so it not only has the functionality to support commission reconciliation but also manages the process of commission reconciliation and collection. The commission services include the input of statements from all providers. If the statements are not available electronically, True Potential will manually enter them in on the firm’s behalf. It has recently extended these support services to include the completion of GABRIEL Returns.

Key to middle-office

In what we would term the middle-office (compliance and adviser functionality), we have long been fans of True Potential’s TCF capability that takes Key Performance Indicators (KPIs) and enables management to monitor these in real time. If these KPIs fall beneath the target levels, the management team is asked to document explanations and where appropriate take action to address them. The aim is to ensure that the company is taking TCF to the heart of their business and the beauty of this approach is two-fold: it helps to drive proactive management of the business for customer and business benefits and demonstrates that it is doing so in an auditable manner for compliance and the FSA.

Another strong piece of functionality is the Client Portal, which allows the client to have the ability to log on and review and amend certain agreed details held on the system. For example, they could see their investment portfolio, and through the valuation links (bulk download and contract enquiry) links have this automatically updated.

Where there are no contract enquiry links in place, True Potential will use a price feed from Financial Express to update the value based on the number of units held on the system. The client can also access the fact find information and either complete it or update it as necessary.

The Client Portal works on the iPhone, Blackberry and Goggle Android phones. While not quite as graphically advanced as MoneyInfo (a specialist in producing client portals), it is the best implementation we have seen of a client portal from any of the traditional practice management systems.

All-you-can-eat pricing

As mentioned earlier, the True Potential business model is very different to its competitors, and while the system stands as a credible offering in its own right, it is probably the business/pricing model that will make or break a purchasing decision.

It does not charge licence fees in the traditional sense but instead charges a percentage of turnover. There are two levels for firms to choose from: the first is a 4% fee and for this the distributor gets everything. It is an all-you-can-eat pricing model, with unlimited licences, training and support. It also includes compliance support services.

The unusual nature of the pricing model is attractive to firms that want to adopt a ‘shared risk, shared reward’ approach. In many ways it appeals particularly to the smaller firms, because it allows them to focus on their core services, rather than having to employ people to undertake compliance or source the services from another service provider.

However, the deal does come with a necessary constraint. For the model to work for both the supplier and distributor it has to be long term. In the case of True Potential this means a three-year contract. With other vendors offering one-month rolling contracts, and with technology rapidly changing, a three-year term is off-putting for some (for those in doubt this three-year term is non-negotiable and backed with strong contractual terms), others see the long-term contract as reassuring and a few apparently have requested longer-term contracts.

Another issue the model has raised is that in offering compliance services, True Potential has put itself in competition with the networks and third-party service providers. With these organisations beginning to mandate technology solutions themselves, True Potential may find it is locked out of large chunks of the market place.

True Potential has made a huge impact in the market and continues to gain market share. It now claims to have about 9,000 users. In some ways the figure is a misleading comparison to other vendors, because the all- you-can-eat pricing model encourages wide roll-out of the system across each firm. In comparison, other vendors charging, say, £100 per user per month will ensure it is only rolled out to those that use it on a regular basis and derive value from it.

Maximising adoption rate

However, the True Potential approach does encourage roll-out throughout an organisation without extra cost, so it helps ensure its adoption rate is maximised as the system is taken to the heart of the organisation, becoming part of the DNA from secretarial staff, to administrators, advisers and management.

True Potential is a well thought-out system, worthy of consideration for many firms. However, potential buyers should ensure they are comfortable with the business model and pricing approach before they spend too long investigating something that may not fit their own model.

Based in 42-44 Grosvenor Gardens, the office is based in the central London Victoria area and will be available to use free of charge for all of our True Potential users.

Meeting area

As you can hopefully see from the images on display here the office will be furnished to a high specification – when we began designing this space we wanted to give our users somewhere where they felt really proud to work from and a space that they would be happy to invite their clients and introducers to for meetings.

As well as providing 6 different sized meeting spaces, the office also has day one capacity for 30 of our users at any one time – with a further capacity for another 20 seats if the office proves as popular as I hope it will. Using a ‘hot desking’ approach, space can be easily booked online, meaning that your working area is guaranteed for the day selected.

Building work is to commence shortly and we expect to take occupancy in the middle of October. Keep your eyes peeled for an invite to our opening event!

In the meantime, if you’d like anymore information please let me know.

Regards

Daniel

Floor plan

IFAOnline.co.uk

Daniel Harrison, senior partner at True Potential, says advisers are moving from national and network propositions to become directly authorised. And he thinks he knows why…

Applications for direct authorisation with the FSA are soaring. Why? In a word: control. Who controls the client? Although this will differ from one company to the next, typically the clients belong to the firm, and not their adviser. This is correct in both the legal sense and also how product providers determine ownership.

The reality is these clients are yours – you are the one with the relationship and you were the one who convinced them of the need to seek sound financial planning. Try telling that, however, to the advisers of Edward Jones who, after being bought by Towry Law, were told to keep their hands off while some were even unfortunate enough to receive legal letters.

More sensible firms will agree to novate clients from the firm into the new DA entity. Bulk novation makes sense for both parties; the IFA has their trail/renewal income instantly switched on and the industry rights are secured, making things such as valuations possible.

It also makes sense for the previous firm as liability for any indemnity commissions passes to the new DA, avoiding any clawbacks. There is a third party here – firms that novate in, but don’t novate out as a cynical attempt to prevent advisers from leaving. Hypocrisy? I’ll leave you to decide that.

Then there is control over ones destiny. Let us look at another failed large firm… more than six months have now passed since Park Row, based on feedback from an external auditor, was closed down by the FSA. And more than six months have passed since any of its 240 IFAs have been allowed to trade properly due to delays with their re-authorisation.

Two points stand out here – how can an external auditing firm create this issue and why should hundred of advisers be made to suffer when many of them have done nothing wrong?

The answer lies with how large firms are now viewed by the regulator. A large firm that applies the same (compliance) standards throughout can multiply an issue by how many advisers (and in turn pieces of advice) are in that firm.

A small firm by its very nature cannot cause the same possible impact to the consumer. This is why it has made perfect sense for the FSA to focus quite heavily on these firms and make sure they are being managed correctly. At ‘best’ this means that advisers have to follow the rule of the lowest common denominator and follow draconian procedures. At worst, the terrible situation that has afflicted Park Row IFAs may prevail.

The answer is to put the adviser in the driving seat by owning the firm and being responsible for their own advice and compliance procedures.

Who is the best person to present to the FSA what has been sold and how the customer has been treated; the compliance manager of a large firm who has never met your clients and has a reputation to uphold (how many compliance managers get another job if they have a bad rapport with the FSA?) or the owner of the small firm who actually met the client, delivered the right advice, is proud of the advice they gave and is confident that his and his firm’s reputation is solid.

A senior partner at True Potential learnt the business working with his father, IFA stalwart David Harrison, and believes advisers can use technology to continue to serve clients across the wealth spectrum after the RDR Interview by Gregor Watt.

At only 29 years old, True Potential senior partner Daniel Harrison has been part of two successful financial services firms. Many people get into financial services as an afterthought but Harrison was actively encouraged to join the new business that his father, IFA stalwart David Harrison, was working on.

Aged 17 and a school-leaver, Harrison was encouraged to take a job as technical support for Harrison senior’s newly established Positive Solutions and work for a year to raise funds for university. Ten years later, Harrison left the firm but only to join the management of new venture – technology and support services provider True Potential.

During his time at PosSol, Harrison saw the company grow from three employees to more than 50 and he took on a variety of roles, from technology and programming to admin and compliance and eventually marketing. He says: “In the early days, there was not much I didn’t do apart from financial. I have always tried to keep away from that dark art.”

Harrison completed his university studies on a part-time basis, fitting his studies around work. “Unfortunately, I never got to sample the proper student life, work got in the way,” he says ruefully.

Following Aegon’s full acquisition of the Positive Solutions business in 2005, the senior management team stayed on to aid the transition to new management but they were already planning their next move into technology.

“We were proud of what we built at Positive and wanted to continue that. When we left, there were 1,800 IFAs making profits of about £;1.25m a month. We handed this well run company over to Aegon making lovely profits for them. But the one thing we noticed was when you join Positive, the IFA became an RI and they have to use the trading styles, etc. What we were finding was that IFAs wanted more independence, they wanted to set their own compliance protocols, they wanted their own brands and there was not much of an argument that we could put up against that.The other reason was that for many years we knew we needed to build a new system from the bottom up.”

Although the new firm was born out of the need for new technology, Harrison says it is more a support services provider than a technology company. Client firms have the option of just using True Potential’s technology but it also offers compliance and other business support.

“We began as a technology platform but have evolved into what we are now. We have handled 253 applications for people going directly authorised. We have around 600 individual IFA firms using us, with about 3,000 individual IFAs, and they are obviously using the technology platform as well as the compliance procedures and the administration and the regulation. We do fall into a funny camp, we are not an Intelliflo but we are not a SimplyBiz.”

The company is clearly doing something to attract IFAs and Harrison reports that the numbers of client firms has been growing exponentially. ByNovember 2009, just over two years after launch, True Potential had 321 client firms but this has grown sharply over the last six months and now stands at 607.

Positive Solutions is its biggest single client but Harrison says new members are coming from the smaller end of the spectrum for IFA firms.

“We find we work best with the smaller firms. The main reason is we are interacting directly with the IFA. The IFA is the business owner, he is also the administrator and often the compliance officer. Because we can interact with them directly, we find it is the best fit for True Potential. We deliberately do not go targeting the big firms.”

Harrison maintains that the RDR should hold few fears for IFAs, even small directly authorised firms, and notes that many of the network and national IFA firms have toned down their scaremongering as the number of advisers either leaving the industry or moving to the protection of a bigger firm has not materialised.

“Some of the national and network chiefs have started to go a bit quieter as they realise that some of what they were saying is countered by hard facts. We have handled 323 new DA applications since January 2009 and, of that, 270 have been since January this year.”

Rather than being apprehensive about the RDR, Harrison suggests that using the right technology can help to bridge the gap that many people are predicting for IFA clients.

He is proud of the firm’s new developments such as apps for the iPhone and iPad that let advisers communicate more efficiently with clients and says this will allow IFAs to continue to serve the less wealthy clients that some advisers suggest will have to be jettisoned because they will no longer be cost-efficient to advise.
“IFAs are starting to realise that if they have got the right tools in place, then actually they do not need to do what some are suggesting and get rid of all their clients except the top 20 per cent. IFAs are saying ’to hell with that, I want to service all my clients.’ If you have the right servicing mechanisms in place, things like the iPhone app and the client website, they audit everything to do with the client. The client can, to a lesser extent, look after themselves, with the IFA acting as the expert.

“Not using technology as a gimmick but as a real enabler for running the business is where the smart IFA will flourish.”

As a result, Harrison says developing new and usable technology remains the firm’s priority. It is already working on a bespoke iPad application for use in client meetings and a brand new version of the core True Potential software. Although the business is only in its third year, this is the fifth version of the core software and Harrison says the business is proud that each version is a brand new programme rather then an old version with a couple of extra pieces bolted on.
“We always try to be at least a couple of steps ahead of what the rest of the industry have.

Born: Gateshead, 1981
Lives: Gosforth, Newcastle-upon-Tyne
Education: Ponteland High School, BA in business and management, Newcastle Business School
Career: 2007-present: senior partner, True Potential; 1997-2007: marketing manager, Positive Solutions
Likes: Rugby, spending time with my wife
Dislikes: Office politics
Drives: Audi S5
Book: A Tale of Two Cities by Charles Dickens
TV programme: The Sopranos
Album: Anything a bit loud with guitars in it
Career ambition: To make True Potential better and work with our IFA clients to help build a new model for financial advice
Life ambition: We won the league last year in my first year as captain of the local rugby team, so the ambition this year is not to get relegated to where we came from. I have got quite a bit of travelling I would like to do, particularly South America.
If I wasn’t doing this I would be…;As a keen snowboarder, I would probably have been a professional skiier or snowboarder

This is obviously a bit different to the ‘traditional’ style of face to face training that all our new users get when they first begin working with us, so we thought we would go back to our roots a little and spend a couple of weeks on the road meeting our users for free of charge, 121 drop in sessions as a trial.

As this is a trial, we have selected 6 of our key locations throughout April and, as I’ll be attending personally, I’m quite excited to be going into the field and speaking directly with our clients.

I’ll hope to bring you all up to date with the progress in May!

Daniel

The agenda is as follows:

• Introduction & Update to True Potential
• Creating Value from Change
• True Potential in action
• “My experience using True Potential”
• Summary and next steps

The venues are as follows:

1^st Feb 2010 – Southampton –  De Vere Grand Harbour Hotel, The Winslow Suite  – Grand Harbour, West Quay Road, Southampton, Hampshire, SO15 1AG – 02380 633033

http://www.devere.co.uk/our-locations/grand-harbour.html

2^nd Feb 2010  – Heathrow – Marriot Renaissance Hotel, Master Syndicate room – Bath Road, Hounslow,Heathrow, TW6 2AQ – 020 889 76363

http://www.marriott.co.uk/hotels/travel/lhrbr-renaissance-london-heathrow-hotel/

3^rd Feb 2010 – Warwick – Hilton Hotel – The Charlecote suite – Stratford Road, Juntion 15, M40, Warwick, CV34 6RE – 01926 499555

http://www.hilton.co.uk/warwick – A429

4^th Feb 2010 – Manchester – Hilton Hotel– Hanover Suite – Airport Outwood Lane Ringway, Manchester, M90 4WP – 0161 4353000

http://www.hilton.co.uk/HiWayWeb/appmanager/portals/hotel?_nfpb=true&_pageLabel=hotel_home_standard&ctyhocn=MANHITW

5^th Feb 010  – Edinburgh – Marriot Hotel – The Teviot Suite, 111 Glasgow Road, Edinburgh, Scotland, EH12 8NF – 0131 3349191

http://www.marriott.co.uk/hotels/travel/edieb-edinburgh-marriott-hotel/

18^th February –  Park Plaza Hotel – Cardiff – Greyfriars Road, Cardiff, CF10- 029 2011 1111

http://www.parkplaza.com/cardiffuk

23^rd Feb 2010  – Central London – The Trafaglar Hilton, 2 Spring Gardens Trafalgar Square London SW1A 2TS, United Kingdom, – 020 7870 2900

http://www.hilton.co.uk/trafalgar

24^th Feb 2010  – Belfast – Templepatrick Hilton Hotel – Castle Upton Estate Templepatrick BT39 0DD, United Kingdom 028 9443 5500

http://www.hilton.co.uk/templepatrick

25^th Feb 2010  – Newcastle – True Potential head office- Waterfront 4, Newburn, NE15 8NY – 0871 700 0007

http://www.tpllp.com/contact-us.php

These seminars have always been extremely popular and very rewarding for both True Potential and you as it provides an opportunity for you to meet our management team and hear our views on where we see the future lies in the financial services industry and how we can help you get there.

Places are limited so if you would like to guarantee your place please email discover@tpllp.com, use the form on this site or call 0871 700 0007

We look forward to seeing you there!

Unable to make it but would like to know more?

Why not register for one of our daily web demonstrations were a specialist will walk you through our offer and technology.  To book your own private and confidential session please email discover @tpllp.com or call 0871 700 0007 or complete the live demo form on our website.

Tracey Scott, Money Marketing

Networks and nationals are using the retail distribution review as a scare tactic to get IFAs to join them, says True Potential managing partner David Harrison.

He describes recent commentary from networks and national IFAs as “propaganda” and he argues that many firms are using the planned reforms to their own ends.

Networks and nationals are using the retail distribution review as a scare tactic to get IFAs to join them, says True Potential managing partner David Harrison.

He believes the RDR will play into the hands of smaller, client-focused IFAs if they approach it in the right way.

He says: “There has been far too much propaganda. Far too many people have tried to frighten IFAs. They have been giving them all sorts of incorrect advice and opinion based on their own need to try to get people to join networks, multi-ties and large IFAs.

“The RDR itself is not problematic. It is a great thing for the industry, the client and the small IFA. There is a big savings gap that people have to close and it is only the IFA who can help do that.

“The public want independent advice. That is why 70 per cent of all new sales are through the independent sector.”

Harrison says the big issue in the current market is profit- ability. He says: “Those large networks and nationals funded currently by product provider ownership are not profitable so how will they survive post-RDR?”

He says True Potential last month recorded its best-ever month, signing up 40 IFA firms, bringing the total number of firms to 321.

Harrison acknowledges that examinations could prove challenging for some but he believes the application of knowledge is key rather than purely focusing on technical knowledge.

True Potential has just launched an iPhone application for its platform, which Harrison says is a first in the market.

One way of looking at this would be a company that has financial problems being taken over by a company that has financial problems. And when that new company fails, allowing it to be taken over by a company that has financial problems. All sanctioned and all legal. Surely this couldn’t happen again though, after the failings of banks and the spotlight being put on “large” organisations?

Eight years ago, this process of transferring bad to bad would have been revolutionary, now it is horrifying. Despite several of these purchases going wrong, there is collective insanity in the market, a belief that somehow, despite all the evidence to the contrary, these deals could be a good for advisers and clients.

Surely the test of whether you would be a good owner of these new clients would be: What is your track record of success so far? How much money have you made? Can you run a small business without losing money?

Here is an even simpler test, what makes the most logical match – allowing a company that is losing money to take over a company that is also losing money or using a company that has made a profit (and therefore the directors may know what they are doing) to help those advisers.

You may be one of those advisers that, through no fault of your own, find yourself being bartered over, and not for the first time. You may even be witnessing the authorities colluding with that bartering by steering you towards a firm of “choice”, a choice based on convenience, not on any commercial or market logic and, worse, based on a mechanism which has been used in the past to repeat the same failure.

The new firm inevitably fails (Why? Well they couldn’t make a profit when they were smaller, so the same directors cannot make a profit when the challenge is greater), and then another firm, also losing money steps in with golden hellos, big promises and a convenient way to switch clients, takes over, and fails.

The above are merely symptoms of the deeper underlying issue which is that the medium to large IFA firms struggle to make any form of profit. In the short term it means that such takeovers lead a product provider to keep a firm running longer than it should have through a further injection of funds.

Why would providers do this? To turn them into a single or multi-tie later on when no one is looking (and then watch the competent advisers leave).

The true answer should be – stop the artificial life-support of these companies, close them down and let the adviser deal direct with the client and the FSA. Call a halt to further insanity. Make the directors and shareholders responsible for the debt they have created.

The Conservatives clearly have a different view as to whether the FSA has been effective. In terms of whether the FSA should be pushing it now or not I think is academic. The main reason for RDR was to encourage greater savings, which should also be the main purpose of any future regulator, and would be a good measurement of regulators effectiveness, for example the ratio of saving versus borrowing, rather than some vague mission statements or principles that no-one can obviously measure, which means you are regulated by opinion, not by hard facts.

IFAs should simply ensure they are focussed on delivering professional service to their clients, and are moving their reward systems towards a recurring income model. There are much bigger external influences driving the market than RDR – and those that get their business model right will have a fantastic future, IFAs are in a great position, and should make the most of it.

* This first featured in Money Marketing as their “Comment of their week” 13/08/09 *

Whilst this does not impact every firm for the next year, with small IFAs seeing a reduction, larger firms will see an increase, and the overall increase in fees is both unacceptable and unjustified.

We have been working with AIFA in the Regulatory Fees Strategy Group to determine the best response to the FSA.

In summary the immediate action which would have the most impact is for as many individual firms as possible to respond to the consultation paper.

We strongly encourage you to send a response, this is easy to do via email to cp09_07@fsa.gov.uk.

Please note that the deadline is 6 April. We would appreciate if you could send us a copy of your response to me at neil@tpllp.com to help with our follow-up work.

We have worked with AIFA for many years and they have been successful in previous campaigns (e.g. FSCS levy) and we hope that by working with again them we can bring about a reduction in the FSA’s excessive fees.