Evolution Unfolds

Changing the game with Financial Modelling


Financial planning practices are evolving to adapt to the changing regulatory environment and market, and starting to adopt enabling technologies that assist the adviser to manage client relationships and to assist in planning the client’s financial affairs.

Warning: Dislocation has begun

Robo-advisers are finding traction and are purely driven by client choice. Generation Y, the rising billion, are as comfortable dealing with a robo-adviser as they are booking a flight or concert ticket online. The robo-advisers, however, are not limited to purely the millennials. The adoption of robo-advisers is about client preference and is driven by the promise of reduced cost and better value.

Unleash value in the right market

If logic prevails then face-to-face financial planning practices will gravitate towards the high-value markets, ie the battle for the affluent and business markets will heat up.

The adviser practice will have to align its value proposition to serve the market that holds the secret to greater growth and profit.

The role of technology in delivering your value

The role of the right technology is completely underestimated in the financial adviser practice. Technology should enable the adviser’s advice narrative and ultimately the value proposition of the practice.

The most important role for technology is to automate the advice narrative of the adviser. Trust and relationship with a client is an important requirement for a successful practice, but the advice narrative is fundamentally the product of the adviser.

Quality of advice narrative

There is a direct correlation between the quality of the advice narrative and the revenue generated in a practice. The advice narrative and quality of the advice narrative must fit the market. If you wish to unleash value and revenue in the affluent and business markets, it is all about the quality of the advice narrative. A relationship can only carry a poor-quality advice narrative to a point before it is challenged with a quality advice narrative.

Meaningful discussions

Financial planning is deeply personal. The adviser of the future needs to enable meaningful discussions. An adviser should understand the fundamental questions with which clients struggle. It is never about a financial product.

Empowering meaningful discussions should happen in the context of a client’s Personal Economy™.

Advanced Financial Reality Modelling

With the assistance of a quant, Allegiance has created something special they refer to as Advanced Financial Reality Modelling™ (AFRM™). Avalon’s core financial engine is driven by AFRM™. It is built to provide a responsive experience for the adviser.

“In AFRM™ we have modelled 49 asset classes for inflow-, growth-, outflow- and asset exit taxes, behaviours, features and growth, and the model can be used to model the financial reality of a client in real-time. We call this Advanced Financial Reality Modelling,” says Kobus Barnard, CEO of Allegiance Consulting.

An adviser can truly model the real and meaningful “what-ifs” of life. “What if I sell the practice five years before retirement, get into a consulting gig for 50% of my income for the next three years, while retiring two years earlier?” This is what an adviser can model in real time for a client on Avalon while sitting next to them.

The traditional scenario planning is a dichotomy: “If I have this product versus I do not have this product.” Financial reality modelling is about modelling a person’s financial life. This meets our massive transformative purpose, ie “to empower financial advisers with Avalon to help clients make better financial decisions”. 

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This edition

Issue 72