Dynamic Planner’s CEO Ben Goss believes that change is on the cards in 2025 for a financial planning industry that’s embracing the power of technology as regulation redraws the map.

Key themes expected to play out over the course of 2025 are:

Regulation reshapes the market: In the wake of Consumer Duty, some financial planning firms are finding it uneconomical to service their lower-value clients. But the market abhors a vacuum, and others will step into the gap. There are already firms using technology to deliver advice at scale. The Advice Guidance Boundary Review could turbocharge the transformation, and open up new seams of opportunity.

AI unleashes the power of data: Advice firms capture huge amounts of data in the financial planning process. In recent years, they’ve understood the power of that data, working hard to clean it up and get their systems talking to each other, so they have the information they need at their fingertips. Now, AI can unleash its potential, unlocking efficiencies in the planning and advice process and providing a huge boost to productivity. With time freed up, advisers can focus on their clients – and take on more.

Advice goes mobile: In a world in which we do everything on our phones, the advice process can feel old fashioned and admin heavy. Mobile planning apps will lighten the load. By making use of this channel, firms can not only deepen client relationships and demonstrate their ongoing value between reviews but pre-empt queries and streamline communication. Research conducted by FTRC for Dynamic Planner suggests clients are onboard, with close to two-thirds keen to be able to check their progress via an app.

Alts hit the mainstream: In her first Mansion House speech, the Chancellor announced plans to mobilise private capital to drive sustainable growth in the UK. Infrastructure and other alternatives are opening up to retail investors, providing clients with new potential sources of return, income and diversification. As portfolios become more complex and incorporate more illiquid assets, firms will need more granular risk analysis that will let them fully understand the holdings and their implications.

Advisers play a vital role: A quarter of the world’s population went to the polls in 2024. As we head into 2025, we’re still waiting to find out what the impact of those elections will be. The year starts with Trump’s inauguration, which could have significant repercussions for global trade and more. At home, tax changes from the budget will start to take effect. This uncertain global landscape means advice will count in 2025 and advice firms will play a vital role.

Dynamic Planner, the UK’s leading digital advice platform, has appointed Rowan Whittington as Growth Director for Tram, marking a significant step in its mission to revolutionise digital engagement in the UK advice market. Tram is the UK’s first white labelled app for advisers, allowing them to transform client engagement at scale.

Rowan joins Dynamic Planner from Confused.com where she held roles as Product Director and Head of Personal Finance. She grew two start-up consumer facing digital businesses within Confused.com and Admiral Car Insurance, where as Head of Product she was part of the Senior Management Team that developed and launched Veygo.

This is a newly created role for Tram in which Rowan will focus on growing the engagement of advised investors working in tandem with advice firms and building on the momentum already underway. Over the coming months Rowan will also build out the team supporting Tram. She will be a member of Dynamic Planner’s Senior Leadership Team, of the EMT and the Board.

Ben Goss, CEO, Dynamic Planner, said: “Rowan’s proven track record of leading transformative digital initiatives, coupled with her deep understanding of consumer needs, makes her an invaluable addition to Dynamic Planner. Her passion for empowering teams, championing meaningful change, and fostering collaboration aligns perfectly with our mission to drive innovation in the UK financial planning market. We are delighted to welcome her to the team.”

Rowan Whittington, Growth Director, Tram at Dynamic Planner said: “Joining Dynamic Planner and taking on such a revolutionary product marks the start of a very exciting journey for me. While financial planning is new to me, my focus on customer centricity is completely aligned with Dynamic Planner’s as well as being at the very heart of Tram for both adviser firms and their clients. Tram launched to industry wide applause earlier this year and I look forward to jumping onto the momentum behind it and taking it to the next level.”

Tram is the new white labelled app from Dynamic Planner which helps keep finances on track and is available from financial advisers on a B2B2C basis. Uniquely Tram puts the customer’s financial plan in the palm of their hand, helping them track their money against their goals daily, delivering hyper personalised content and enabling them to engage with their financial adviser quickly and securely when needed.

Dynamic Planner is the UK’s leading digital financial planning and advice platform supporting 45% of investment advice firms in the UK, reviewing more than £100billion of client assets and profiling more than 1,700 investment solutions from 150 asset managers worth over £280billion each quarter.

Dynamic Planner CEO Ben Goss believes advisers who focus on customer needs and see change as an opportunity, to demonstrate value in a hybrid world, are well placed for success in 2022. Below are the key themes Ben expects to see dominate over the next 12 months:

1. Hybrid models become an opportunity for differentiation – Hybrid approaches developed during the pandemic have become firmly established. The challenge now is for firms to enhance the virtual client experience, looking for ways to differentiate themselves through branding and online customer engagement.
2. Sustainability is not optional – If sustainability received a nudge into the spotlight from the pandemic in 2020, the past year has put it firmly centre stage. It’s looking increasingly certain that regulation will underpin the shift in the next 12-18 months by mandating sustainability as a part of suitability. Adviser education will be vital, as will simple tools and processes that enable firms to implement sustainability preferences in a consistent and repeatable way.
3. Consolidators look for efficiencies – The number of advice firms in the marketplace continues to fall – by 2% over the last 12 months, according to the FCA. We expect some of the consolidators to want to unlock efficiencies by centralising businesses around simpler propositions and shared customer experiences to drive productivity.
4. Regulation is laser-focused on suitability – From Consumer Duty to PROD, the regulator is looking hard at customer needs and how to meet them. The drive towards ‘risk-based journeys’ and the long-talked about Investment Pathways have the potential to create more activity in the direct to consumer space, presenting an opportunity to differentiate the value of personal, professional financial advice. PROD rules offer firms the ability to make their businesses more streamlined and efficient by focusing on target markets.
5. Inflation is back on the agenda – The outlook for inflation and interest rates is more uncertain than it has been in over a decade, while the road out of the pandemic is proving bumpy. These conditions mean it will be important for clients to be invested and to be diversified – and for advisers to use a risk-based cashflow planning approach that is equipped to model uncertainty.

Ben Goss, CEO at Dynamic Planner: “From hybrid working to sustainability, the pandemic has accelerated changes in our industry that might otherwise have taken a generation. There are two ways to respond: to resist change or to embrace it. Advisers who focus on the needs of their customers, make use of the technology and tools at their disposal, and see change as an opportunity to demonstrate their value are well positioned to thrive in 2022 and beyond.”

Don’t miss Ben Goss’ Keynote at our 2022 Conference.

Speaking virtually to 1000 financial services professionals from across the UK at its 9th Annual Conference this morning, Dynamic Planner’s CEO Ben Goss praised the transformation of the financial planning profession over the last 12 months and claimed that advisers and clients who more fully embrace technology will better weather the challenges to come. He said:

“An extraordinary transformation has taken place over the past year. The pandemic set the industry and wider world on a rollercoaster ride. Financial planning can be tough at the best of times, but without the face to face contact that clients were used to, it was even tougher. And as the pandemic grew, the nation’s concerns over health became a priority.

“But it wasn’t just health concerns that we faced, there was a major challenge to people’s invested wealth as well as their income. You, the advice industry rapidly transformed working practices to be there for your clients with reassurance and support. As an example, last year in Dynamic Planner we saw four years’ of growth in clients completing risk profiling questionnaires remotely, and a number of advice firms have reported the ability to support up to three times as many clients per adviser by using facilities such as video calls and screen sharing. We are immensely proud that through a combination of your expertise and our technology, we have helped get many of your clients through this crisis.

“We see the need and opportunity to engage with clients around their financial planning being bigger than ever post the pandemic, and we strongly believe that those, whether adviser or client, who more fully embrace technology will better weather the challenges to come.

“We now live in a hybrid world – where advisers and clients increasingly undertake their planning together on the same system, at the same time. Our vision is all about empowering firms to meet client expectations in this new hybrid world, and deliver truly engaging financial planning through a model where advisers have all the benefits of remote when you need them, but will also have everything you need for face to face client meetings too.

“At the heart of Dynamic Planner’s vision of One System for all financial planning needs – where we have delivered significant enhancements to client risk profiling, portfolio review, cashflow planning and research and recommendations – is the concept of having an ‘always on’ plan, enabling advisers and clients to properly engage with their financial plan and deliver interactions and client experiences that really demonstrate the value of the ongoing advice relationship.

“Of course, in terms of client engagement, an increasingly important aspect of financial planning is reflecting your client’s sustainability preferences in their portfolio. Advisers face two challenges: how to have a really good conversation with clients who are unlikely to be experts in this field, and how to objectively assess the different manager approaches and solutions? We’ve worked with our partners MSCI to provide whole of market objective ESG analysis on UK funds, and in the coming weeks we will also be launching a psychometric sustainability questionnaire that gets to the root of how people feel about sustainability when investing.

“The events of the past year have been unexpected, but the changes it has paved the way for are profound. Over the next four years we will be doubling our investment in Dynamic Planner, delivering a powerful solution that enables advisers to deepen and extend your relationships with clients. Technology has been at the heart of keeping the financial world functioning these last 12 months, and as the country plots its way out of lockdown, we expect to be at the centre of that ongoing transformation.”

Want to see what Dynamic Planner can do for you? Request a demo

A client whose financial adviser had relied upon performance scenarios required in a Key Information Document (KID) at the start of this year, may have been unprepared for this year’s coronavirus crisis.

The same could also potentially be said if their adviser relied upon past performance of an IA sector to highlight potential returns in future – or made simplifying assumptions like ‘market recovers within 1yr’.

Such techniques are employed by advisers while, of greater concern, the performance scenario approach required in KID’s – which already applies to Packaged Retail Investment and Insurance-Based Products (PRIIPs) – is expected to be applied to all UCITs funds from the end of 2021.

The 2020 coronavirus crisis will cast a spotlight on the use of historically based performance statistics as a guide to future risks and returns.

Problems with historic performance

For fund managers, the Summary Risk Indicator (SRI) required in a KID and the associated performance indicators are calculated using five-year historic performance data as the key determinant.

While the SRI requires the use of value-at-risk analysis, taking into consideration a probabilistic distribution of potential returns and losses, the dispersion of returns during this year’s crisis underlines how sweeping a categorisation this is and why it is problematic to prepare clients for their investment journey using it.

Reviewing the range of UCITs funds, which have their current risk indicator score calculated at 3 (from a maximum range of 7), yields an array of 16 IA sectors with well over 200 primary funds – equity, mixed asset or bond-oriented, with the latter including local currency emerging market debt funds.

The situation worsens when reviewing the forward-looking performance scenarios required on a KID. Looking at a popular, volatility managed, multi-asset fund with an SRI of 3 out of 7, an ‘Unfavourable’ outcome reveals the investor might be expected to only lose 1.48% after a four years and further, can expect to enjoy a positive return over the holding period of seven years of 1.18%.

‘Moderate’ and ‘Favourable’ forecasts, meanwhile, project persuasive growth figures over these time frames.
The classic criticism of this approach is well documented and arguably well deserved. As Deloitte has put it previously: “For many funds, bullish market conditions in recent years may result in overly optimistic projections. Trends may be exaggerated in case they are projected over long investment horizons, as very positive past performance is assumed to continue indefinitely and the potential cyclical nature of markets is not taken into account.”

Crises like 2020 can happen

For investment advisers, reliance upon historic IA sectors performance to explain potential risks and returns does not work either. The range of outcomes in a single fund sector is often so wide as to be meaningless in terms of expectation setting for a client’s portfolio.

Assuming a sector’s performance history will continue to repeat itself is of course simply wrong. Adopting this approach, for example, at the beginning of this year would have believed a crisis like Covid-19 could not happen.

Relying on deterministic projections to help clients plan for the future and risk match portfolios only introduces more limitations – and even if they are married with ‘market crash’ and recovery assumptions, because these ‘crashes’ too rely in main on historical data.

The emergence of contemporary asset allocation-driven portfolio construction and financial planning tools echoes thinking that, according to research, more than 90% of the variability of returns of a typical portfolio is explained by asset allocation.

A progressive, more robust answer

Progressive models, in comparison, adopt a combination of historical inputs – returns, volatility and asset class correlations – alongside inputs reflecting prevailing conditions, like inflation, bond yield spreads and forward-looking expectations for global growth and dividend pay-outs.

These inputs are then fed into an asset model, which assumes a distribution of returns, the extremes of which may not have been experienced yet and can only be seen in ‘tail risk’ events.

Our experience at Dynamic Planner, so far in 2020, is that this provides a more robust approach for managers and advisers to construct and plan portfolios. The graph below shows the observed performance of the Dynamic Planner – MSCI benchmarks over the last year, against their expected value at risk (calculated at a 95% confidence limit) alongside the maximum drawdown experienced.

This value at risk statistic is used with the client during the risk profiling process, so the adviser can be sure it is a consistent basis for matching the portfolio and there is no risk of ‘miscalibration’, as the FCA describes it.

The use of asset allocation-driven, forward-looking models, to assess potential returns and losses for clients, has been growing rapidly since 2008 and the global financial crisis. They represent not just an improved mechanism for projecting and for setting investor expectations, but also for matching them to investments that are more likely to perform within these expectations in a way that is fair, clear and not misleading.

They greatly improve upon historical or deterministic models and mean clients sat with their advisers don’t look back in anger while planning a bright future.

Find out how Dynamic Planner’s Asset Risk Model could help your firm.

The pandemic this year has impacted different sections of society in different ways. An example: research by Legal & General highlighted that 1.5m people could now delay retirement because of Covid-19 and its financial impacts.

This year’s subsequent lockdown, demanding people spend extended time at home than they might otherwise, has further caused many to re-evaluate their priorities in life. According to further research by Canvas8, many of us are reassessing the importance of work and professional life in comparison to personal relationships. As a result, if people can retire earlier in future, perhaps they are now more likely to do so.

The need today for engaging and expert financial planning and advice, in this changing environment, is arguably greater than ever. In complex and stressful times, where the future really is not known, planners have a pivotal role to play – listening carefully to their clients, empathising and trying to help them understand their priorities and options now.

Going back to basics – perhaps on a video call and asking core planning questions, such as those from American-based thought leader George Kinder – could well illicit answers very different to those given by clients six months ago. For example:

1. ‘What does money mean to you?’
2. ‘If you were financially secure – how would you live your life? What would you do with money?’
3. ‘If you only had a few years to live, would you change your life? How?’

In a socially distanced world, the answers to these questions and building a subsequent financial plan and offering regulated advice raises new demands of firms’ previous processes. There are three key considerations, I would venture, now needed in this new normal:

1. Financial advisers are increasingly adopting a single system covering the entire planning process and integrated with their back office and platforms they use. Why? First, it saves time and also removes more room for human error associated with re-keying information. It also means that firms are embracing and adopting a consistent and single definition of risk throughout their client proposition, mitigating what the FCA has termed the risk of ‘mis-calibration’ between the adoption of different planning tools and technology.
2. Financial planning technology comes into its own when it enables advice firms to build and plan dynamically, in real time, with their clients. Not only is this faster than more traditional processes, it frees up advisers to do what they do best: know the client and shape recommendations accordingly. All the while, technology does what it is best at – automating often complex analysis. Many firms using financial planning technology to complete annual client reviews over Zoom, for example, have reported being able to shift from three to four meetings a week, to three to four meetings a day. A huge change.
3. The presentation of information to clients must be fair, clear and not misleading. This becomes even more vital when technology is used via video chat. The field of behavioural finance is rapidly offering significant insights into how clients are likely to behave, based on their personality, situation and information they are given. The best technology will incorporate such insight into outputs.

What does this all mean? In short, financial planning today is even more valuable as a result of the coronavirus pandemic. Adopting technology which helps advisers objectively create plans in real time, offers not only transformational productivity benefits, but the ability to support good outcomes for many more clients at a time when they need it most.

If you are not already a Dynamic Planner user – and would like to find out more about how we can help you and your firm – please get in touch.

Global appetite for environmental, social and governance concerns continues, of course, to grow – arguably exponentially. Governments and courts worldwide too are taking affirmative action.

In February 2020, here in the UK, the Court of Appeal ruled that plans for a third runway at Heathrow Airport were illegal, because they ran contrary to the government’s commitment to tackling climate change and to the Paris Agreement to achieve zero net emissions by 2050.

Furthermore, the regulator, the European Securities and Markets Authority (ESMA) has been consulting for the last couple of years on the inclusion of ESG risks and characteristics within the investment advice and management process.

One of ESMA’s aim is to ensure that financial risks stemming from climate change, environmental degradation and social issues are well understood by managers and end investors and subsequently addressed in the suitability of advice given.

However – and this is certainly worth reflecting on – ESMA’s chief goal of its Strategy on Sustainable Finance, published in February 2020 and adopted by the European Commission, is to ‘reorient capital flows towards sustainable investment in order to achieve sustainable and inclusive growth’.

‘Transition risk’: Changing demand and behaviour

At the Dynamic Planner annual conference earlier this year, the BBC’s business editor Simon Jack asked a panel of chief investment officers, ‘What happens when governments or financial institutions will not lend to or invest in companies that don’t meet sustainable criteria?’

Two years ago, the Bank of England set out what it termed ‘transition risks’. One example was energy companies. The bank says that if government policies were to change in line with the Paris Agreement, then two-thirds of the world’s known fossil fuel reserves could not be burned.

This could result in changes in the value of investments in sectors like coal, oil and gas. The shift towards a greener economy could also impact companies which produce cars, ships and planes, the bank adds.

2020’s financial crisis, resulting from the coronavirus, highlights what happens when companies suddenly experience a global collapse in demand, thus demonstrating how transition risk could manifest itself.

This year’s coronavirus effect and experience

State-enforced quarantines the world over, designed to combat Covid-19, shut down economic activity almost overnight, resulting in a negative impact on oil and transport companies – and funds holding oil and transport stocks suffered accordingly. Conversely, ESG funds without such exposures fared better.

Legal & General’s Multi Index and 7IM’s Balanced fund have, to choose examples, both seen their ESG variants outperform in-house peers over the last 12 months to date. The funds share the same risk profile (5 on a 1-10 scale), are managed by the same teams and share the same mandates – except that the ESG variants have the ability to invest in companies with stronger ESG credentials.

Furthermore, both funds outperformed the Dynamic Planner MSCI Risk Profile 5 benchmark over the last year. While not directly caused by environmental factors, the 2020 impact on portfolios is a good illustration of risks created by exposure to industries already feeling pressure from economies transitioning to greater sustainability worldwide.

Risks accompanying negative environmental and social impacts of investments are growing as global awareness, alongside government and court actions, force markets to take them into account. But how do you help manage these risks in portfolios for your clients?

3 steps to managing ESG risk

1. Talking to your clients about their values and the characteristics of investments they would prefer is a first step. While an industry-wide taxonomy continues to be developed, the Investment Association has done good work here with the Responsible Investment Framework. Having a conversation with clients, as part of a suitability assessment, will ensure you understand what the client is looking for.
2. Establishing a suitable risk profile and matching the portfolio to this profile becomes even more important as ESG risks come ever more to the fore. Risk-based benchmarks such as the Dynamic Planner – MSCI indices provide a robust and relevant comparison you can employ to demonstrate the performance of a portfolio for a level of risk taken, as opposed to an unrelated index or benchmark like the FTSE All-Share.
3. Selecting investments that reflect clients’ preferred ESG characteristics and which are matched to a suitable risk profile, mean clients are not only more likely to gain the outcome they are looking for, but they will do so in a manner that more reflects their values. When ESG risks do manifest themselves, clients and their portfolios should be better prepared.

If you are not already a Dynamic Planner user – and would like to find out more about how we can help you and your firm – please get in touch.

Advising clients on income in retirement suddenly became even more challenging this year. The coronavirus has influenced not simply the way clients of financial advice firms think about their money, but also their short and long-term health too.

It has been a time for advisers to closely support their clients and ensure they fully understand risk and to plan accordingly.

As of 7 May 2020, the Dynamic Planner MSCI Risk Profile 5 benchmark was essentially flat year-on-year, while the FTSE All Share was down sharply by 17%. In comparison, at its lowest point in 2020, on 18 March, the Dynamic Planner Risk Profile 5 benchmark was down 10.65% year-on-year, while the All Share dropped 30.5%.

Such analysis quickly raises wider questions for clients of advice firms, who are either in or are soon approaching retirement.

Should they continue to withdraw money from their portfolio at a regular ‘safe’ rate? Should they reduce that amount or even pause portfolio withdrawals? But if so, when, how dramatically and for what length of time? It isn’t easy, clearly and the need for professional financial advice has arguably never been more acute.

What does a typical client in Dynamic Planner look like?

The typical client currently having an annual review in Dynamic Planner is aged 62; they are a Risk Profile 5, on Dynamic Planner’s 1-10 scale [where 1 represents the lowest level of risk and 10 the highest]; and they have a portfolio of £242,000 – close to a quarter of a million pounds.

As someone nears retirement, they ideally have a clear understanding of their financial needs, their time horizon and a guaranteed income to meet their expenses. In reality, however, none of this will be true, even in benign circumstances, which of course is the opposite of what we have experienced in 2020.

With a portfolio of £242,000 an index-linked annuity might yield 2.9% or £7,000 annual income for someone in their early 60s, modest in the context of a current average UK household income of £29,400, according to the Office for National Statistics.

An alternative of staying invested at a Risk Profile 5 would, over the long term, be expected to deliver a return 5.1% a year – or £12,000 before charges and inflation – which bolstered by a state pension for a couple of £17,500 totals £29,500, just over that average household income.

At a glance, the case to remain invested appears overwhelming – greater returns alongside an ability to access capital. However, what of those tangible risks we spoke of at the beginning – in particular, investment risk and drawdown risk?

The risk of investing money

For a Dynamic Planner Risk Profile 5, the strategic value at risk (VaR) – in layman’s words, the maximum the benchmark asset allocation will lose annually 95% of the time – is 13%. Therefore, losses can be expected to be greater 5% of the time. And at the time of writing, the Risk Profile 5 benchmark has operated well within expectation so far in 2020.

Of course, losing say 10% from a £240,000 portfolio is significant for someone either in or close to retirement. However, if they remain invested and their level of withdrawal is sustainable (see below), they can expect to recover and still enjoy the average returns.

Our own research further shows that there is a link between clients with lower risk profiles and people who sell in a falling market – underlining the exacting need for an accurate attitude to risk assessment and one which, moving forward, potentially reflects how older clients typically become more risk averse in retirement.

What, notably, is often not being captured here is additional risk created by withdrawing a fixed amount from their portfolio each month, for example. In short, drawdown risk – alongside tactical risks asset or fund managers take when building an income-focused portfolio are equally important to understand. There is no free lunch for investors, to coin a phrase, so being clear about that is key.

The risk of regular withdrawals

There is additional risk faced by the clients of advice firms who are drawing down a fixed amount each month when markets drop suddenly and, particularly, if that drop happens early in their retirement when the value of their portfolio, after potentially a lifelong accumulation phase, is greatest.

In that scenario, which we experienced in March 2020, each withdrawal by the client steepens the fall in value of their portfolio and reduces the ability to recover. The unpalatable risk then arises of the client running out of money. Add longevity risk and that risk becomes only greater.

How do you mitigate that additional risk? Below are three potential solutions:

1. Understanding your client’s capacity to take risk begins by helping them understand their future financial needs and wants – and talking through the difference between the two. Base ‘needs’ expenditure is what plans should be designed to fund, ideally with some cushion. More discretionary ‘wants’ can be added to illustrate an ideal scenario. Note, if a cushion is not in place, withdrawals may need to be reduced or even paused during times of extreme market volatility like March 2020
2. Ensuring the client has the capacity to meet their needs and continue to withdraw a regular income – not just at the bottom of a single simulated event like a financial crisis, but throughout the period indefinitely – is fundamental to assessing their capacity for risk. A good stochastic model will do this. Note, deterministic assumptions here – for example, modelling a market recovery within 12 months – can significantly and dangerously underplay drawdown risk as described above.
3. Fixed monthly withdrawals require a monthly, not annual view of risk. This means fund managers take action to remain within a monthly risk ‘budget’, as opposed to an annual one, to maintain a level of return. If a fixed level of withdrawal is important to the client, Risk Managed Decumulation solutions in Dynamic Planner are a strong option.

In summary, for your clients who are preparing for or are in retirement, the need to understand and robustly test their financial needs – and then build, monitor and manage an investment solution matching those needs is an ongoing process.

Risk-based cash flow planning and risk targeting investment solutions always were important resources in an adviser’s armoury. In today’s world, they are priceless.

At the heart of any successful business are great client relationships, which is why I want to share with you some of the amazing successes firms are having with Dynamic Planner – using it to take engagement with their clients to the next level, while removing huge amounts of time, cost and risk in the process. For many, adopting of Dynamic Planner is proving transformational.

It has now been 12 months since we first launched our new, £5m upgrade, Dynamic Planner Elements. At the time, we said it was a three-year journey for us and that we would be delivering a series of incremental upgrades to enhance your firm’s financial planning experience. And that is what we have done.

Our first major upgrade was a new, MiFID II-compliant review process, which we deliberately designed with your client interactions in mind. Now, over 1,000 reviews a month – and rising every month – are being delivered in Dynamic Planner by firms as more realise the step change in quality of output and engagement you can generate.

An informed and engaged client is the clear objective, but completing the review process efficiently and in a manner that minimises risk is key to sustained success. Firms have continuously reported a reduction in time spent preparing reviews with Dynamic Planner. Savings of an hour to savings of over five hours per review are common.

One system for all your financial planning needs

Our purpose at Dynamic Planner is to enable you to match people with suitable portfolios through engaging financial planning. One of the principal challenges that stands in the way of achieving this, with sufficient levels of suitability and efficiency, is the currently fragmented landscape of financial planning technology.

The use of multiple tools in the financial planning space generates not just the scope for miscalibration around suitability, but inefficiencies and risks around rekeying. It is also hard to demonstrate your professionalism when your firm is cutting and pasting from multiple sources to produce a client document.

This fragmented landscape is a structural challenge for the industry, often born of the complexities of 20th century products, practices and tax laws. Risk profiling, portfolio analytics, asset allocation, product research, investment research, pension switching, cash flow and reporting – all of these have their own ecosystem of tools, few of which talk to each other and all of which have their own definition of risk.

This is not a sustainable approach for the future, so we are investing in Dynamic Planner to deliver you one system for all your financial planning needs.

By the time we are finished, Dynamic Planner will enable you to: review a client’s risk profile, current situation, portfolio and ensure suitability; research and identify compatible platforms, products and investments for your target market, based on their risk characteristics and appropriate features and costs; and build goal and risk-based cash flows to answer key client questions and successfully plan their futures.

Understanding risk is at the heart of great financial planning

Great financial planning is about engaging with a client to help them build a view of the future and a plan which they really buy into. It requires a robust assessment of both the client’s situation and the investments needed in order to achieve their objectives, with a shared understanding between the client and the adviser of the risks involved.

Without that assessment and a consistent definition of risk throughout the planning process – from risk profiling the client, building a cash flow and researching and constructing the portfolio – you run the risk of sub-optimal outcomes. The good news is that Dynamic Planner uses a consistent definition of risk throughout this process.

For the 10th year running, we have published the outcomes of our risk profiles and they have, again, performed as expected with assets invested in the target benchmarks experiencing incrementally lower levels of volatility from Risk Profile 10 down to Risk Profile 1.

Clients though do not invest for the risk, they invest for the return, so what is particularly reassuring again this year is the strength of returns produced by the benchmark allocations associated with each risk profile.

Last year, MSCI launched the Dynamic Planner indices – regulated multi asset benchmarks – which are now available for you in Dynamic Planner, to aid your selection of and illustrate the performance of multi asset portfolios. The benchmark for Risk Profile 5 for example has delivered comparable returns to the UK market since launch at considerably lower volatility. It has also outperformed the IA Mixed Asset Sector 40-85%.

Our aim is to help you demonstrate your value in the advice process by delivering good returns for a given risk level, as well as ensuring suitability. Our independent asset risk model is a uniquely powerful benchmark to help you show this.

We will help you make the most of Dynamic Planner as one financial planning system and in the process help you take both your client relationships and your business to the next level.

Want to find out more and how Dynamic Planner can help support your firm? Request A Demo today.

In this blog our CEO Ben Goss outlines below what he believes will be the most transformative issues facing the advice industry in 2020.

1. Sustainability becomes part of the suitability conversation

Addressing climate change is the most pressing need of our time. UK advisers, as gatekeepers to one of the largest investment pools in the world, are in a position to significantly influence the impact that these investments can have.

In 2020, the European Securities and Markets Authority will complete their consultation on explicitly including discussion of environmental, social and governance risks in the investment advisory process. Firms will also be expected to ensure that staff possess the skills, knowledge and expertise for the assessment of these sustainability risks. Whether its conclusions reach these shores post-Brexit is uncertain. However, the crucial role that investment advisers play is clear.

2. More clients see real value from their annual review

Two years in from the introduction of MiFID II, and with many advice firms now having upgraded or planning to upgrade their review process in 2020, clients will begin to really see the benefit of an ongoing advised relationship.

Done well, firms are able to demonstrate the value they are providing through assessing the ongoing suitability of the portfolio including its risk, performance against risk-based benchmarks, product, cost and, as above, sustainability suitability. Helping clients feel they are on track should avoid switching due to short-term performance chasing, which is good for the client, the firm and the asset manager.

3. Risk-based cash flow planning comes to the fore

According to the ONS, the number of people aged over 45 in 2020 is expected to grow by 258,000. While this is slightly lower than previous years, the total numbers in this group will swell to almost 30 million.

At the same time, the number of people in defined benefit pensions will continue to fall. It’s currently around 1m in the private sector, down from 2.5m a decade ago. As potential clients start to get serious about accumulating wealth, and ultimately planning their retirement with assets which require taking investment risk, the demand for cash flow planning based on an objective assessment of risk will grow.

4. Assessing suitability 2.0 is published

The FCA expects to publish its findings for its Assessing Suitability Review in 2020. Its last study in 2017, found that advice in investments, pension accumulation and retirement income was suitable in 93% of cases.

There were two areas of concern however: defined benefit transfers and high-risk investments. This second review is expected to assess how well firms have implemented MiFID II, PRIIPS and Product Governance requirements. The timetable is expected in the spring. It would not be a surprise perhaps if some focus was given to the risks of illiquid investments, given the issues this has surfaced in 2019. It will be interesting to see the FCA reflects ESMA’s work on sustainability.

5. 5G accelerates the pace of technology in the advice process

The adoption of 5G networks is expected to become widespread in 2020 with download speeds 10 to 20 times faster than today. For advisers and clients, that means the ability to use digital systems to engage with clients, either remotely on a mobile or in person using a tablet, will expand too. The use of computationally intensive planning systems to explore future scenarios or provide interactive reviews via mobile devices will grow.

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