FPA Fintech Buyers Guide and Checklist

06 March 2019

Jayson Forrest

Jayson Forrest is the managing editor of Money & Life Magazine.

The second in a series of guides to help planners with their fintech needs, the FPA Fintech Buyers Guide and Checklist outlines the steps planning businesses should consider when assessing fintech partners. 

To complement its highly successful fintech report – Mapping Fintech to the Financial Planning Process: Why Fintech is not a Threat – which specifically plots and matches fintech solutions available in Australia for the financial planning advice process, the FPA has released the FPA Fintech Buyers Guide and Checklist.

The latest guide in the FPA’s suite of products to help licensees and planners navigate their way through the myriad of fintech solutions available in the marketplace, also includes a Technology Assessment Checklist to assist practices in properly assessing their fintech needs and choosing the right technology parter or software solution for their requirements.

Commenting on the FPA Fintech Buyers Guide and Checklist, FPA CEO, Dante De Gori CFP® says this guide is an extension on the earlier Mapping Fintech to the Financial Planning Process report, and specifically addresses how a financial planning business should approach the process of engaging with a technology provider in relation to the buying process.

Mapping Fintech to the Financial Planning Process report identified the issues faced in the financial planning process and the solutions available. Our latest FPA Fintech Buyers Guide and Checklist is designed to help financial planning practices select the best fintech partner for their specific service proposition and client base,” he says.

“Going through the checklist will help prevent planners wasting time and money on technology that won’t meet their needs or those of their clients.”

According to FPA Head of Policy and Standards, Ben Marshan CFP®, the FPA Fintech Buyers Guide and Checklist is the result of “countless conversations” with FPA members, consultants and fintech providers over the last 12 months.

“We know business models from the past are not working efficiently in an environment of increasing costs, rising consumer expectations and regulatory obligations. But it is equally clear that if technology investment doesn’t align with the financial planning process and business outcomes, it leads to inefficiency, duplication and additional costs.”

Marshan, who also assumes the lead role of the FPA’s fintech projects, says the FPA Fintech Buyers Guide and Checklist seeks to navigate through the key considerations for a financial planning business as a technology buyer, starting with the fundamental question of: ‘Should you be buying technology in the first place’, through to ‘Once you’ve decided that your business can be enhanced by means of a technology solution, what are the key considerations and processes that maximise the possibility of your success?’.

“The guide has been written as an easy to follow case study of selecting a customer relationship management (CRM) system, which effectively illustrates the issues and considerations a planner needs to work through in their business,” Marshan says. “Importantly, the steps and considerations outlined in the guide and throughout the case study, can be replicated with any aspect of a planning business or advice processes.”

An easy to use guide

The FPA Fintech Buyers Guide and Checklist is divided into eight sections, covering:

  1. What are you trying to solve?;
  2. Your business strategy defines what technology you may need;
  3. Determining the best solution;
  4. Overview;
  5. Buying considerations;
  6. Appendix 1: Conducting due diligence on a technology provider;
  7. Appendix 2: Technology Assessment Checklist; and
  8. Appendix 3: Comprehensive financial planning process.

For example, using the CRM case study, the guide prompts planners to consider how they can determine the best technology solution for their business through some common questions that span the various categories they need to consider (See Chart 1). These questions include:

  • What are you hoping to achieve by introducing a CRM?;
  • What is the level of technology capability in your firm?;
  • How complex is your business structure?; and
  • What systems are required for each role.

Table 1: Some guiding questions to ask yourself and your business1

What is the right service model across your various client segments? How could digital tools change your current cost structure?
What should you outsource? If you introduce technology engagement, is it in line with your demographic?
Who will be the champion of the technology? How will this solution be integrated with your other systems?
How do you prioritise this against other initiatives? Do you have the right people and culture to deliver this enhancement?
Is this in line with your business vision?

To better answer these questions, it’s important to carefully consider the buying process.

Buying considerations

Marshan acknowledges that the process of streamlining the delivery of financial advice and improving client engagement can be made easier by implementing the right fintech solution for a practice’s needs. But concedes that many of these offerings are not complete solutions for a financial planning business. Therefore, he believes it is crucial that planners have “concrete questions answered” before they make a fintech purchase, to ensure the software selected will benefit planners and their clients the most.

The guide suggests seven key areas that planners should first investigate as part of the software decision-making process. They are:

  • Will this software solve my problem? – Determining whether the software will actually solve your problem is a key consideration. This requires having enough awareness of the advice and business processes, business strategy and client demographic to enable the identification of the problem and an assessment of the benefits of the solution being considered.
  • Pricing – The choice of software shouldn’t just be about price. Customisable and functional features of the software you purchase should be thoroughly researched before you commit to it, thereby ensuring you make a financially sound decision.
  • Updates – While not essential, software updates provide you with an indication of the provider’s vision, their capacity to grow and their willingness to adapt with their clients.
  • Service – Look for software solutions that provide 24 x 7 system monitoring and services, scheduled daily backups and other procedures that will eliminate the risk of downtime and prevent data loss in the event of an outage or system failure.
  • Reporting – Ensure your software solution offers you plenty of flexibility in reporting, such as the ability to build custom and ad-hoc reports, as well as dashboards and visualisations, so you have the tools you need to address your specific information requirements.
  • Application programming interface (API) – Basically, this is all about the way in which a computer program communicates with another computer program. If a potential provider is unable or won’t integrate with other tools you’d like to use, then you should reconsider having them as part of your technology stack.
  • Data security – This incorporates a number of areas you first need to consider.

Data storage location: Know exactly where your data is being stored. Check with the provider and make sure you are aware of any risks and/or obligations that might arise with your data being stored offshore.

Data accessibility: For data to be useable, it must be both correct and available. Ask your service provider for uptime statistics and whether there are any guarantees for safety.

Facility security: Ensure your provider is either manning or using data centres that operates 24/7 each and every day, and has appropriate levels of security.

Disaster preparedness: The facility where the online data is being stored should be prepared for any type of disaster that may occur.

Reputation: Who is the cloud provider? Are they reputable like Microsoft, Amazon or Salesforce? Or are they small local providers who may have higher risks?

Due diligence

The FPA Fintech Buyers Guide and Checklist includes a section on ‘Conducting due diligence on a technology provider’.

This part of the guide breaks up core due diligence categories – like security/compliance, regulation, business continuity, change control, management, and longevity – into sub elements, with a short description attached to each.

“In this technical section, we have gone beyond the base understanding and discussion covered off in the earlier parts of the guide,” Marshan says. “This means some areas of explanation are decidedly technical but nonetheless essential for any business wanting to conduct due diligence on a technology provider.”

Technology Assessment Checklist

The FPA Fintech Buyers Guide and Checklist also includes an informative checklist that can be used to assist businesses with their software selection process. And while Marshan concedes the checklist is not intended to be an exhaustive list of questions and points to consider, it is nonetheless, “an effective tool to maximise the likelihood of selecting both a technology partner and system to meet a planning practice’s needs”.

The full FPA Fintech Buyers Guide and Checklist is available by clicking here.

Chart 1: Key indicators for considering a CRM

There are key indicators that a CRM will improve business efficiency, reduce risk and provide a platform for growth. Which of these relate to your business?

Information on clients, partners or providers is stored in Excel sheets.

Client related emails are stored in your inbox, not on the central client record.

Client information exists in more than one system within the firm.

Details of work in progress are not centrally accessible across the firm.

Reporting is compiled manually when needed.

Revenue data is held in a separate system to client data.

Client files are made up of data stored in several systems.

If any of these are true in your business, you should be considering a CRM.