Fishing with chips

Sophisticated software has simplified the process of buying financial services, writes John Hancock
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It is one of the most important and expensive decisions in our lives. Yet buyers of financial services have traditionally had to rely on others to interpret their requirements, and recommend and implement an appropriate financial plan, with all the associated dangers of mistakes being made and wrong advice being given.

All that is changing. New computer-based systems bring clarity, accuracy and quality to the process of securing the best financial plan. Point- of-sale systems, the most basic of which allow financial advisers to calculate prices on the products they sell, have existed since the mid-1970s, but early examples were little more than electronic rate-books. They could not assess and quantify needs.

The Financial Services Act, with its obligation on advisers and companies to offer "best advice", made needs-based systems for investors an urgent requirement. At the same time, portable PCs have reached a development level and power equal to desktop models.

Nevertheless, systems with their text-only screens were hardly user-friendly. The latest generation of systems use powerful hardware and software capabilities to add real value to investors' ability to specify what they want, before ensuring that the package offered meets those requirements.

By taking into account all current plans, modern systems avoid duplication and reduce costs for clients who must increasingly make their own arrangements as the state withdraws from universal provision. There is also the value for investors of participating fully in the process upon which financial plans will be based. It will hopefully make us more aware of the financial planning consequences of career and other major decisions.

The basic principle of such systems is that they ask savers a series of simple questions designed to provide the computer with enough information to suggest individually tailored investment options. Because of the power of the computer and software, questions can be singular and in plain English.

By breaking the process down into single small steps, the new software ensures that investors are more likely to answer questions accurately and to understand each step. It is also easier to understand how calculations have come about. The more information that can be included in the process, the more accurate and relevant it is likely to be.

Based on the information provided, the computer can carry out a series of complicated projections, telling investors what steps they need to take in order for their chosen financial outcomes to be met.

Today, information - and the outcomes and consequences of various choices - can be shown not only numerically but graphically, in ways that are far easier to understand. While the graphics may reveal some disturbing images (such as the dramatic underfunding of a person's retirement income), it is better to be disturbed when making plans rather than further down the track when it is too late.

Paul Yates, the manager in charge of development and implementation of Prism (Protection, Retirement, Investment, Saving and Mortgages), the point-of-sale system devised for Abbey Life, says: "The system should be so good that you hardly notice it until decision time. Then it must offer clear choices and options."

Gone are the days when salespeople could offer what suited them best. The control that point-of-sale software exercises over sales processes, by not proceeding until certain steps and checks have been completed, allows a high degree of quality to be built in to the process.

Also, the training and process of advisers in using the technology aims to ensure that investors fully understand the criteria upon which advice and decisions have been based.

For companies, quality and understanding mean fewer complaints, fewer cancellations and lower costs. The day's applications may be downloaded each evening so that processing can commence before paperwork has arrived in the office, hopefully reducing charges levied by companies on their products.

So what should we expect from point-of-sale systems? They should be clear and easily understood both through quality of design and the calibre of training which has equipped advisers to deliver the service.

Abbey Life estimates that its advisers need two months' training to be fully able to use the company's Prism system. Any information that may be required in several places (birthday, retirement date, etc) need only be entered once. Information should be available as figures and graphics as well as being capable of instant recalculation if personal factors or product selection change. Today's generation of computers are but a start. Internet access, network computers and even digital TV will further expand the capabilities of information systems for customers, giving them greater choice in the financial decisions they maken

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