Origo managing director Anthony Rafferty has outlined ISA and pension transfers, integration, cyber security and the pensions dashboard as four key finch themes affecting financial advice firms in 2020.
ISA and Pension transfers
The speed of ISA and pension transfers is a high-profile issue for both the FCA and the government.
In April 2019 Origo, working with its Transfer Service community of organisations, established the Origo Transfer Index. The index tracks the speed with which providers cede assets, from the point where the company receives notification of transfer from the client’s new provider to the time the transfer takes place.
Currently, 27 organisations, which make up 80% of the transfer volumes, are voluntarily providing their transfer data for the index.
Rafferty says: “We see these as the vanguard of progressive companies looking to make a difference for individuals and to help drive the market forward and we expect more to join in 2020.
“We believe this will continue to be a high profile issue for the industry and we will be encouraging more of our Origo Transfer Service community to become a part of the index, helping to drive transparency in the market and so improve overall transfer performance to ultimately create better outcomes for individuals.”
Rafferty has warned that a marked disconnect between systems being used by financial advice firms is creating inefficiencies and costing firms in time and money.
He says: “Having systems that talked to one another and passed information back and forth easily and accurately, simply for basic functions, could enable substantial improvements in advice firms’ efficiencies, to the extent of enabling them to double the assets with which they deal.
“That is a significant opportunity for businesses which is being withheld from them at present by the organic way the market has grown.”
While more integration has taken place in the past few years, Rafferty says it has been point-to-point and undertaken by firms with the most money and greatest market coverage.
He adds: “In 2020 we expect the benchmark – the basic level of integration – to be at a point where more and more advice firms will be able to perform these basic tasks between systems, reducing the expenditure of resources on them and enabling the delivery of improved outcomes both for their business and importantly, their end clients.”
Rafferty believes firms would benefit from a hub-and-spoke approach to integration rather than point-to-point, enabling platforms, software and back-office providers to connect to the hub once and integrate with other partnering systems.
He continues: “Raising basic system integrations across the board in this way will enable advice firms to save money and better utilise resources to help improve and, if they wish, grow their businesses. Hence, we see this as a major step forward the market will want to take in 2020.”
Cybercrime has been raised as one of the top concerns for adviser businesses in 2020.
“Keeping client data safe within a firm can be easily targeted. It is the passing of information, invariably personal and confidential in nature, between client, adviser and platforms, where the information moves outside of a company’s security systems, which can be the weak point that cyber criminals exploit,” Rafferty says.
“Emails are a case in point. Quite often sensitive information is emailed within the body of an email or in an attachment. Yet sending an email is like sending a postcard through the post – it can be easily read and altered. We hear too many stories about emails being intercepted and data stolen and then used to commit cybercrime. Personal data accessed in this way can be used to scam payments and commit identity fraud, sending of false invoices, requests for passwords and carrying out malware attacks being just a few examples.
“We recognise that advisers, and their staff, are becoming more aware of their regulatory and compliance obligations, particularly under GDPR and MIFID II. In this regulatory environment, deploying email security into any organisation is vital to reduce business risk and build trust with clients.
“With firms able to be fined heavily for data breaches, and as cybercriminals become ever more sophisticated in their methods, we believe protecting client data will be an even greater focus for financial services companies in 2020, with businesses of all sizes looking to greater protect their email communications.”
Origo has been involved with the technological development of the Pensions Dashboard from the outset, with the creation of the Pension Finder Service (PFS), which enables individuals to securely locate their pensions and display them on the dashboard.
Rafferty says: “Government, backed by industry, wants to deliver as soon as possible and we are now at the stage where the final areas, such as consumer identity, data security and privacy, are being tackled and resolved.
“The opportunity now is to build on the work done to date and put in place the final elements required to make working Dashboards available. And in doing so, will help current and future pensions savers to better plan for their retirement by having more information at their fingertips.”
While there are teething problems to overcome, notably the differing levels of digital capability amongst providers who may need to automate legacy systems, Rafferty says what is important is to progress the initiative to the point where the first Dashboard becomes a reality.
He adds: “Origo’s entire purpose is to connect the financial services industry to benefit everyone – and to my mind, there can be no better way of doing that than to help deliver Pensions Dashboards.”