Planning software that uses traditional modeling methods will not allow planners to provide scaled advice or offer lower advice costs, trapping planners into using tools that make them unaware of the final advice result until hours into the process.
Provisio Technologies has claimed, in a whitepaper released yesterday, that most financial planning software is built around the concept of modeling which has not taken into consideration the shift to scaled advice which has taken off in the last decade.
The paper stated that "advisers used what they had" — modelling software — to advise on these new, simple strategies. They found that the time required for a scaled strategy Statement of Advice (SOA) did not scale down proportionally with the defined scope.
"This ‘trial and error' nature of modelling software means the whole process can take several hours before an adviser has settled on the correct strategy."
Provisio stated that planners should be shifting to newer ‘optimisation' modelling techniques which input a particular outcome first and then work through the steps to reach that goal.
"Advisers cannot profitably continue spending one to four hours producing a SOA using modelling software that has been designed for comprehensive advice. They need a solution designed specifically to optimise advice queries where possible, which automates the repetitive modelling and analysis to produce finished SOAs in minutes."
Provisio Technologies chief executive Cameron O'Sullivan said the time difference was important for advisers and that "optimisation does this without any loss of quality, and can reveal scenarios that may not have been considered previously".
Provisio claims optimisation has still yet to be identified by many planners as the difference between modelling and optimisation appears to be "concealed ‘under the hood' and the benefit is not obvious until taken for a proper test drive", it said.
"Only optimisation gives advisers the ability to model, compare and deliver the best strategy recommendation in minutes, including the SOA. Hours of work is saved and advice quality improved by automating the testing and comparison of all possible strategy models."
