Life as a Freelance Paraplanner

Martins Blog:

Star Date: January 2009

Mission : To boldly go where no man (or woman) has been before (well except Roger and Richard and Emma and Emma and Heidi and …………..)

As a paraplanner of some years standing there are many, many aspects of the role which I really enjoy and had often wondered (like many of you) whether it would be feasible to leave my comfortable employed position, with a salary and all the benefits that go with it and work for myself.

As I’d never worked for myself before and having looked at the blogs and articles on the site I asked Roger Barlow, who many of you will know and who has been a freelance paraplanner for many years, to write a short article about what’s its like to be a freelance paraplanner and the types of things you need to consider before taking the plunge.

Roger’s article is below. Next week I’ll let you know how I got on in my first weeks as a freelance paraplanner.

The Financial Services industry is changing rapidly, not least with the recent publication of the RDR. The events of the previous months will have seen many businesses looking at their business model and considering the best way to structure their business so that they remain successful in the future. 

Something which is being considered more often is the outsourcing of the paraplanning function. If the business levels are not the same as they were 12 – 18 months ago then surely businesses don’t need to employ the same levels of back office staff as they did previously and this includes paraplanners as much as anyone else.

However these same businesses will still want a quality report when they do write the business and the solution may be that they outsource this work to a Freelance Paraplanner rather than employing a paraplanner on a full time basis. We therefore asked Roger Barlow, who many of you may know and has been a supporter and contributor to the forum from the start, to write a short piece about starting out as a freelance Paraplanner. Roger is a freelance paraplanner and has been for a number of years. He can be contacted by email here  Thanks Roger for a fantastic insight into the role of the freelancer.    

How do you become a freelance paraplanner? 

This has been one of the most visited topics in the forum to date and there has been considerable interest in other posts on the subject of freelance paraplanning.  So, how do you become a freelance paraplanner? Establishing yourself as a freelance paraplanner is a big step to take.  You will be giving up a full time job with regular income and employee benefits such as a pension, death in service, healthcare etc and stepping into the unknown. 

You probably have no previous experience of running your own business.  But with careful planning and a lot a determination, there is no reason why you cannot make a successful career out of freelance paraplanning. 

So where do you start? 

• You will need to decide whether to set yourself up as a company or as self-employed.  An accountant can help you number crunch some figures to determine which option is right for you and will also help you in setting up the business.
  
• Once established, you should register the business with the Data Protection Act and comply with the principles and guidelines of the Act.  
• You should also consider taking out liability insurance.
  
• Get a solicitor to assist with writing your terms of business. 

The office: 

For most freelancers, the office will be a room at home, but you may prefer to find a small office space although this will of course increase your costs and may not be practical for many when starting out. 

• You will need a desk, a computer, access to the internet, a fax and printer.  
• You will need to establish an email address and website and there are many web-hosting companies on the internet that can assist you with this.  
• Your website will be the second best advertisement you will have for your business, after yourself, so my advice would be to spend wisely on a website that looks professional and sends the right message about your business.  Many IFAs looking for a freelance paraplanner will search the internet, so your website will be their first impression of your company, and they will no doubt view your competitor’s websites too. 
• Consider whether to subscribe to research websites, such as Synaptic, O&M, Aequos, Analytics etc.  All come at an expense to the business, but will add value to the service you offer.  Remember that the standard licence granted by these companies will not allow you to use the results for your IFAs.  Most companies offer a ‘paraplanner licence’ which does allow you to do this but this will cost extra.  Not doing so could leave both you and your IFAs breaching a licence and not able to rely on the outputs – not very compliant.  

What do you charge for your services? 

Fees for freelance paraplanning vary considerably.  Some will charge a monthly retainer for a set number of hours, and then charge for work over and above the agreed hours.  If you decide to charge a retainer, do you carry over any unused hours to the following month, or should those unused hours then be “lost” to the adviser?  If carried over, consider the impact this will have if the adviser provides a significant increase in workload the following month.  Perhaps good news to be receiving the work, but it has to fit in with your other commitments and can make it difficult to manage your time effectively. 

Do you charge an hourly rate or fixed fee per report? 

If its hourly rate, you should consider whether you confirm to the adviser before working on a case how many hours it will take (which is effectively fixed fee anyway).  If you decide on fixed fees, you will need a menu of fees for the different work you will undertake.  Consider that additional work such as provider selection, asset allocation, and fund selection, cash flow forecasting etc will all take additional time and should be charged accordingly. 

Generating business.   

I would suggest the first adviser you should approach about your new service is your previous employer.  As a valued employee, they may consider using your services on a freelance basis rather than incurring recruitment costs and starting from scratch with a new full time employed paraplanner. 

You could consider advertising on various financial services forums and websites but again, these come at an expense.  Attending seminars and conferences offers excellent networking opportunities and also helps keep you in touch with developments within the industry.  This is an important issue, because once you are working from home, you can become rather isolated. 

You could contact other freelance paraplanning companies to work on a sub-contracted basis.  This is a good way to get started, as you will gain valuable experience with how a freelance paraplanning business works. Remember that freelancing means giving up on those employee benefits you previously enjoyed.  So it’s not just your income to consider, you will need to arrange your own pension, protection, private medical insurance etc. Establish a business plan for the future. 

As your business grows, are you happy to continue as a one man/woman band, or do you want to expand the business by employing other paraplanners (either on your payroll or as freelancers).  Bear in mind that employing other paraplanners will mean you spending more time checking their work and managing a larger client bank than report writing.  Utilising other paraplanners will mean setting up a contract between you and the paraplanner and your solicitor can help with this. 

As you become established, you will quickly find that there are times when there are not enough hours in the day to manage workflows.  Do not over commit yourself.  Tempting though it may be, taking on too many clients will almost certainly mean compromising the service that you provide to existing clients.  Your business will be built on your reputation as a paraplanner and a key area of new business is referrals from existing advisers.  So managing your existing clients is very important. 

For those of you who are interested in the concept of freelance paraplanning but perhaps apprehensive about running your own business, I understand a new concept will be coming to the market sometime in the New Year whereby you can buy into a packaged freelance paraplanning service that will provide you with everything you require to set up on your own, including the software, marketing and leads.   

Freelance paraplanning will not suit everyone.  Giving up a full time position with regular income and employee benefits is a big step to take.  Moving from an office environment where you are surrounded by colleagues and in regular face to face contact with your adviser into what will probably be, at the outset at least, a spare bedroom at home and working on your own is a massive change.  It will also take time to build up your client base and you should be prepared for having little income in the early months. 

Even when you are established, workflow and therefore the income your business receives will fluctuate. However, the benefits of running your own freelance paraplanning business can be hugely rewarding.  The satisfaction of running your own business, the variety in the work that you undertake, the relationships you will build with many different advisers, the improved quality of life and the personal satisfaction and financial reward for all your own hard work is hugely appealing.  For those of you who take the plunge, best of luck!

We thought it would be a good idea to start to provide reviews of new products. We felt that as we were reviewing Plans and products and trying to understand them as part of our day jobs it would be good to share this information with our readers.We have tried to set this out in a way which answers basic questions and tried to collate all the various pieces of information from the company literature and present this in a way which is appropriate for paraplanners, whatever their level of knowledge or experience.

Invariably when a company launches a new product there is lots and lots of information but not all of this is relevant to us as paraplanners. We want to know how the Plan works, the technical information, who would use the Plan and where it would fit into a solution for a client.  We hope that this is a useful starting point for you when conducting your research.

The first product we have looked at is the Longevity Income Plan from Life Trust.  This is a new addition to the growing ‘hybrid’ or ‘3^rd way’ retirement planning market but approaches the issues in a different way than other competitors by focusing on creating rising income in later life as part of an effective deccumulation strategy.

What is it?

The Longevity Income Plan is a retirement plan designed to protect clients against the key financial risks that face many in retirement – living a long time and the compound effect of inflation.  The main feature of the Plan is that the longer clients live, the more money they could receive. The Plan is best used as a “booster” to existing sources of retirement income, such as pensions and annuities.

The potential for rising income is made possible by a combination of offshore investment growth and the allocation of bonus fund units each year, called “Birthday Units” throughout the life of the Plan.

Who’s behind it?

The company behind the Plan is Life Trust. They are a new company who launched in January 2008 and are the first provider to specialise in providing financial solutions to deal with challenge of increasing longevity.  They are financially backed by JP Morgan, Royal Bank of Scotland and D. E. Shaw.

What does the Plan do?

The Plan provides an annual payment to the Planholder shortly after their birthday from the age at which they choose to start taking income – any age between 75 and 80.  The Plan will make 21 annual payments, and then it will cease.

How does it work?

The Planholder makes an investment anytime between ages 18 and 75 next birthday.  The investment can be for an amount of between £5,000 and £1,000,000. The minimum period before payments commence is 5 years, so Planholders can invest right up to age 75 for an 80 Plan.

Clients investments’ into the Plan grow in two ways: through the performance of their investments in a range of carefully selected funds and, uniquely, through the allocation of additional fund units, called Birthday Units, to their Plan each year.

Birthday Units arise from the fact that all Planholders’ funds are mutually invested. This means that when Planholders die or surrender their Plan, their funds are re-distributed amongst all remaining Planholders as extra fund units, “Birthday Units.”

If clients need to cash in the Plan, they can do so after 2 years, however they cannot cash-in the Plan once payments have started.

The Plan also has a death benefit – if the Planholder were to die before payments had started then they would receive an amount equal to their original investment. If they die whilst they are receiving annual payments then the annual payments stop and the Planholder would receive an amount at least equal to the original investment, taking into account the payments they had already received.

As the Plan is treated as a PLA, part of the annual payment the Planholder receives is treated as return of capital and is therefore not liable to income tax.

Who is it for?

This Plan is designed for individuals who are in good health (they are not aware of anything which is likely to shorten their life expectancy) who wish to insure against the possibility of running out of income as they get older.

What’s the point?

To have a Plan which will provide a rising income well into old age, helping combat the effect of inflation and rising cost of living in later life.

People are living longer; in fact someone who is aged 50 now will have a 45% chance of living until they are 90!  This means that the traditional way of providing for income in retirement, annuities (as there are fewer and fewer final salary schemes) may well have to provide an income for at least 30 years.  Take into account the fact that many people opt for a level annuity rather than one which increases means that in real terms their income will decrease every year!

Because the Plan offers a rising income in old age, it can counter the effect of inflation, meaning that clients can continue to enjoy the standard of living they’re used to in later life. It can also help pay for unexpected costs such as care, if required.

So the point is to have a product which compliments the other, more traditional, income streams by getting clients to invest what could be a relatively modest amount, at a time when they are most likely to have capital, to provide a safety net of inflation-proof income should they survive into their 80s and 90s.

Worked examples

Life Trust has produced some of the best web based product information I have seen for quite a while.  You can download several documents in PDF format considering the following scenarios (click here and you will go straight there):

• Supercharge a level annuity
• Loan trust
• Final Salary Pensions
• Discounted Gift Trust
• Lifetime Income Planning

There are also three video guides looking at different scenarios in more detail (click here and you will also go straight to the right place on the site):

1. How longevity is increasing
2. Impact of increasing longevity
3. Longevity risk

Personally, I like this form of marketing as it gives you access to the product’s details and how it works whenever you choose to do so.

Is there an investment element?

Yes! The Planholder’s original premium is invested for at least 5 years before they can even start to receive any annual payments from the Plan.  For that reason Life Trust worked closely with OBSR to define 4 risk categories Cash, Cautious, Balanced and Growth (unsurprisingly!) and to select relevant funds for each of the risk categories.

At the outset of the Plan you can select as many of the funds as you wish in the percentages you wish, the only proviso is that the minimum amount for each fund must be £500.  If at some point you wish to change the funds you can, the Planholder is allowed to switch funds 3 times per year; the first switch is free and then it is £25 for each switch after that.

Can the Plan be placed in Trust?

Yes. Both the death benefits and the income payments can both be placed in Trust.

How is this treated for Inheritance Tax?

Placing the original investment into trust would be classed as a Potentially Exempt Transfer (PET)

Is there a place for this in the market?

Yes I think there is. There is certainly no other product like this and the Plan is trying to provide a solution to what is only going to become a larger and larger problem.

With any new product it is always difficult to see exactly where this would fit but I feel this could be suitable for a client who has a reasonable to good life expectancy and who is prepared to give up some of their capital to secure an income to support them should they reach an advanced age.

I could see this being an option where a client is undecided whether to take a level annuity because they want the higher amount of income now or an increasing annuity because they don’t want to have effectively less income each year because of inflation.

They could take out a level annuity then in 10 years time the annual payment from the LIP would start which would add to their income.

It also works with drawdown clients, allowing clients to take a higher level of income in the early years of retirement, knowing that the income from the LIP could kick in later.

What’s it similar to?

That’s the problem – it’s not. It’s a new product from a new company.

However, having said this there would be no reason why a client couldn’t invest the amount they were going to invest and then purchase a PLA at the time they need the income. The advantage of this course of action would be that they could always get at their investment whilst it is being invested; they would have a much greater choice of investment; they could purchase an annuity at a time to suit them. However they would not get the security of the death benefits, particularly when the annuity is being paid and the advantage of the ‘Birthday Units’.

Although investing now and purchasing a PLA later is an alternative, there is no guarantee that at the time they need the income, PLA rules will still be the same. Choosing the LIP will give peace of mind now and cut out uncertainty.

Technical Stuff

• Minimum age at entry – 18
• Maximum age at entry  – 75 on next birthday
• Minimum premium – £5,000
• Maximum premium – £1,000,000
• Initial charge – 5%
• Initial commission – 3%
• Trail commission – 0.5% of fund value for the life of the Plan
• Number of funds – currently 10
• Minimum investment per fund – £500
• Top Ups allowed – No (but you can take out another Plan)
• Surrender Value – Surrender possible after 2 years. No surrender after Vesting Age has been reached. Surrender Value is the original investment amount less initial charge or current fund value less any Birthday Units added, whichever is lower.

Birthday units? What are they?

Birthday units arise form the redistribution of fund units which were held by Planholders who have died or surrendered their Plan during the year and are so named because they are reallocated to other Planholders on their birthdays.

The calculation of birthday units takes into account the actual mortality experience of the pool and hence the actual number of birthday units available for redistribution (if everyone stayed alive for ever there wouldn’t be any birthday units!)

Summary

The Plan certainly fills a gap in the market and for certain clients it does provide a solution which will give them an added source of income at a time when they most need it. It is not a solution that should be used in isolation and is intended to be a Plan which compliments other products which provide income in later life.

There are a number of assumptions made and in order for the Plan to be appropriate you have to agree with the assumptions made.

1. That a client will need more income as they get older. There are many theories which say that as a person gets older they will need less income not more. However these theories don’t factor in the effect of inflation over time or the possibility of needing to fund care in old age.
2. That the initial investment will continue to achieve growth. It is possible that the amount available after 10 years could be less than the amount invested.  Due to the combination of fund growth and addition of Birthday Units every year, this scenario is highly unlikely.

So if a client doesn’t need these things then the Plan probably isn’t for them.

Where can I find further information?

Website – www.lifetrust.com

Email – salessupport@lifetrustplc.com

Telephone – 0845 051 8351

There is a wealth of information on the website which is very easy to use and explains the product in a much greater way than we could do here.

Knowing how long a client can expect to live is very useful when considering most types of financial planning issues yet, apart from in some unfortunate cases, most of us cannot really say for sure when we are going to die. Despite this we still need to make a realistic assumption regarding longevity and some of the most common cases where this is required are:

• When preparing a lifetime cash flow forecast. Underestimate and the client may well find out that they run out of money. Over estimate and the client may die sooner than expected having not spent as much money as he or she could have done.
• Retirement options – will ASP be an issue? Is a fixed term annuity good value for money? Should a spouse’s pension be included?
• Long term care planning.
• Capital erosion when drawing an income; i.e. how long will this money last, how much income can I take, what investment return is required.

I know many people who apply a default longevity period to age 99, especially when preparing a lifetime cash flow.

This is certainly the case for many users of the Truth system which, along with its parent Prestwood, is the most popular financial planning tool amongst advisers I know. I think the idea is that it is better to die with some money left than to live longer and run out.

Many clients take the view that the last cheque they write out should be to the undertaker and it should bounce!! It is rather difficult to plan with that much accuracy but there are tools and resources available to help us apply a bit more of a scientific approach.

The GAD Mortality Tables provide a free to use reference table based on the average life expectancy of males and females across the UK. You can make things a bit more interesting and interactive by using some of the tools available online. A very good article with several good reference links can be found on the BBC here.

Citywire and New Model Adviser have a tool on their site known as the Deathometer. You can enter your client’s date of birth and thoughts as to their own life expectancy (pessimistic, neutral and optimistic) in the box shown here. This is a fairly simplistic approach and it is difficult to know the basis of the client’s own opinion on their chances of living to a ripe old age. However, it is better than guessing.

The results are shown in an attractive chart which shows how your life expectancy changes in five year bands. Based on the information I entered in the box above, a 40 year old male with a neutral outlook will live to age 83.

If I change my outlook to positive I get an extra four years; a pessimistic approach means that I have three years less. The results are very similar to the GAD tables and appear to be based on historic average data. The chart looks good and graphically demonstrates to a client what the average trend will be. My main concern here is that there is no allowance made for:

• Regional variances
• Lifestyle
• Current state of health
• Occupation
• Other risk factors

The BBC has produced a very good guide on BBC Health which takes into account many of these issues and tells you what to change. This could be of use to some clients although I am not sure how you would document this in a report!

The University of Wales Institute has produced another tool with several variables on their site. This is rather basic with a simple form to be completed which you can see by clicking here. Based on my answers I only have 35 years to go. I don’t know if that says anything about regional variances in Wales but that is not good news for me!

Other sites I have found on the same issue are:

• Tiscali - yes them!
• Northwestern Mutual – This is possibly my favourite tool as it asks some good questions about lifestyle and history and is presented in the form of an online game. As each question is answered, the results produce changes to the image of ‘me’ and my life expectancy (called the ‘Age Tabulator’).

My results are shown below. In case you have not worked it out, I don’t smoke (legal or illegal substances), don’t drink much, have normal blood pressure, take a little bit of exercise and had an insurance claim in the last three years. Despite all this, my life expectancy is 84 which is very similar to the Deathometer. In preparing a financial plan for me, I would factor in the likelihood that further medical advances will come along over the next 40 years extending my life a bit further in times of time if not quality. I would therefore choose a mortality age of 90 and be happy if I get there in reasonable condition.

Perhaps the most extreme site out there is The Death Clock which tells me I am going to die on 30 November 2040 – one for the diary then!

This weeks poll looks at the popularity of the various software tools available for financial planning. We are looking here primarily about lifetime cash flow forecasts and shortfall analysis. I have used all of the tools shown in the poll and have my own views on the pros and cons of each which I will share in a future article. For now though, please visit the forum by clicking here and add your vote and comments.

Truth is the financial planning part of the Prestwood software system which has been ‘re-packaged’ and launched by Paul Armson. I attended a demonstration and workshop given by Paul where I met Mike Linksey of Fincision. Mike has posted a thorough review of the software on his site which I have reproduced below.

I’ve seen virtually all of the adviser-targeted financial planning tools & packages currently available in the UK, (plus a few that aren’t but might be soon) but for quite a time I’ve been intrigued by the enigma that is Prestwood, the system pioneered by Paul Etheridge. Until now, it’s been fairly low on most people’s radars, but a change in proposition and a tie-up with 1st Software has created a buzz in the adviser community.

Yesterday, I finally got around to making the trip to Stourbridge to catch Paul Armson’s seminar on Truth, the financial planning package borne out of the Prestwood system.

Paul has been running these seminars to full houses for the last month or so, and places on the remaining seminars are disappearing fast. It seems that some serious people are getting interested in Truth, with Richard Allum of Adviser Assist and James Hay Wealth Management’s recently-departed UK sales director Stefano del Federico being just two of the dozen delegates who joined me.

And it would appear that Truth is gaining traction, with Armson claiming to have signed up 120 people in the last 3 months alone, and having somewhere between 4-500 users in total less than 6 months on from launch. These numbers are bound to grow once 1st Software switches off it’s own tired-looking planning tools and releases the next drop of Adviser Office (next week?) containing the Prestwood export option. But, the real news is that Quay Software are very close to following in 1st’s footsteps, which would give Prestwood access to over 70% of the IFA back office market plus the tacit endorsement of the two biggest players. Looks like Ben Goss’s Distribution Technology has got some unexpected and serious competition!

So, does Truth justify the hype?

Well, if your business model is about holistic financial planning, the answer has to be yes. In fact, Truth is unquestionably the leader of the pack here by some margin. If I had to attribute this view to one element, it would be the product’s maturity, which on the face of it might seem to be a strange statement given that Truth is less than 6 months old, but that would be to ignore the fact that the base Prestwood system of which Truth is a subset has been around for a lot longer and obviously has had much care and attention lavished on it. The underlying functionality has a settled feel to it, like slipping on an old pair of slippers!

The bugbear of many of these planning systems in the past has been the laborious task of populating them with client data which almost always resides in one or more disparate systems. Truth has clearly understood this is a time-consuming and frustrating issue, and has pre-populated common data, but crucially also provides import and export functions with built-in data mapping tools. This should make the task of moving data into and out of Truth a much simpler job than for competing systems. It’s been apparent to me for a while now that back office software users have been tinkering under the hood with the result that the premise of a communal data integrity has been compromised. That field which carries the label ‘account name’ may well contain the client’s dining preferences in one office, and a don’t mention the war note in another office! Any notion that a standard dataset can be extracted from a back office will undoubtedly lead to frustration in future for a growing number of users, so a facility to map custom data from the back office to Truth is a real winner.

Within Truth, the majority of the client-specific data is held within an innovative ‘Items’ area. This bucks the trend of spreading data around rigidly-defined categorised pages (i.e. personal, assets, liabilities etc.), and really does make a lot more sense. Users can even customise the amount of data within each client record, as there is a very simple mechanism to add/ remove data subsets from a master list. If your client doesn’t have any investments, just delete the whole investment template dataset; if your client has some weird and wonderful estate planning arrangements not covered in the standard template dataset, choose one or more relevant data templates from the Available items list and add them in, or invent your own!. There is even the ability to build your own custom client data super-templates (i.e. single person, unmarried couple, married couple). This is simple but clever stuff.

It really is worth spending time making sure Items is fully populated, as the rest of the Planning function feeds off it. Because Truth is primarily a cashflow modelling tool, the concept of planning is geared around presenting and manipulating data on net worth, income, expenditure and cashflow; Truth isn’t about stochastically-modelled outcomes, risk-based asset allocation models or sophisticated fund selection. This isn’t a unique approach (PlanLab and DSTiPAS do similar jobs), but I won’t argue with Armson’s observation that for many clients, this will be the first time they will have actually seen a true net worth statement, and it is frequently quite an eye-opener.

What I will take issue with him over is the notion that you could sit down with clients and run Truth in front of them. Yes, the graphics are a powerful way of getting the message across, but Truth’s one genuine fault will get in the way of this: the UI and it’s distracting and ultimately annoying deficiences! Truth is a desktop or server based package, so it shouldn’t suffer from the inherent hinderances of a browser-based UI, but unfortunately, Truth’s UI is just a mess. Whilst the underlying information architecture of Truth is solid, the presentation leaves a lot to be desired. It’s simple and sadly all-too-common stuff in our industry:

• confused and inconsistent design patterns
• poor navigation
• untidy page layouts
• poorly integrated add-on modules (Finametrica risk profiler, VCA database)

It’s blatantly obvious that usability wasn’t a factor in the development of Truth, which really is a shame; with a good usability makeover, Truth would be peerless. Instead, competing systems with relatively inferior functionality will snatch business from Truth because of better UI design (PlanLab springs to mind). Whilst the adviser community is notorious for not being overly concerned with the eye candy (unless it’s blonde), I think that for £197 +VAT per month you should expect a better user experience; sometimes form needs as much TLC as function!

But lets get back to the goodies! On top of the cashflow planning, users have the ability to overlay catastrophic events to simulate what might happen if a client were to die or be disabled. These overlays can be used against the client’s current situation (scenario) or used to further illustrate the benefit of certain recommendations (take out additional protection, and your wife won’t run out of money to feed the kids when you die!). Again, the functions might not be unique, but the simplicity of it’s implementation is gob-smacking! There is also an additional module concerned with Estate Planning which can get as simple or complex as a user might wish. I confess to allowing my attention to wander to take in the magnificent surroundings of Paul Etheridge’s house during this bit of the seminar!

Once you’ve finished playing with the cashflow toys, the Financial Plan report-building area comes into play. This is another brilliantly simple but powerful aspect of Truth. The base Prestwood system is famed for it’s highly intuitive and flexible reporting functionality, and Truth contains the full version. The layout and concept is similar to the Items area, with the ability to drag & drop report elements from a standard list to create a plan. The standard list can easily be augmented with custom paragraphs (which have the ability to be context-sensitive) & graphics, and the user can choose between a built-in word processor or exporting out to MSWord.

Audit and archiving functions are comprehensive, and there is also a Meeting Agenda writer and simple Contact Management module included within the package. Licenses for the Finametrica module are an additional cost, but heavily discounted.

With a first-user license cost of a sniff under £200+VAT per month, Truth isn’t the cheapest system available by far, but subsequent licenses come at only £50 per month per user, and the user license is not person-specific. The cost also includes training days and unlimited telephone support.

This relatively high cost may put off some prospective purchasers who either don’t want or understand the power of Truth, but there’s one more trick Armson has up his sleeve which might prove the tipping point, and it can be found here. Expect to see an avalanche of consumer press and clever marketing in the not too distant future! Armson is clearly making a play to drive the adoption of Truth via consumer-led demand, a unique concept in the UK financial planning arena.

I’ve been waiting for someone to make this play for around 18 months, particularly as it has been so successful for some of the US players (Financeware, Ameriprise), and it is no surprise that the marketing-savvy Armson should lead the way in the UK. The commoditisation of the financial planning process itself brings a new USP to the advisers armoury, and one which I firmly believe will be a significant factor over the next few years. We are already seeing polarisation within the stochastic modelling camps with Barrie & Hibbert winning the battle over the actuarially-inferior Distribution Technology and poorly-marketed Tillinghast offerings, and this is arguably led by the perception that B&H have a more robust model and supporting processes: they can be trusted (particularly when over 70% of european insurers use them on an institutional basis). I foresee Truth following a similar line of being marketed as the ‘trusted’ planning tool, supported by an evangelical franchise of Truth-using financial planners.

Strategists at commercial financial planning package providers such as Distribution Technology, PlanLab, & DSTiPAS need to get their thinking caps on: the Truth is dawning, and it’s coming to eat your lunch!