Tech Review: Personal Touch

This week Mark Loosmore of AT8 Group examines Personal Touch’s new attitude-to-risk tool.

Personal Touch is the second largest network in Great Britain, according to FSA tables. Its foundation is in the general insurance and mortgage markets, but it has recently been growing considerably in the life, pensions and investment sectors.

Its growth has been based on a focus on providing personal, local service; backed up with strong training programmes and heavy investment in technology. It now has more than 220 IFAs in the network and has a clear ambition to grow this to create what it believes will be the strongest of all network propositions.

Tech focus

Technology is at the heart of Personal Touch’s strategy and it has created its own back-office system, called Toolbox, of which it is very proud.

Toolbox has been built in-house, with tightly integrated third party services such as the quotation portals (Assureweb providing the tightest integration) to provide a ‘joined up’ solution.

Attitude to risk

At the start of the year, Personal Touch recognised that at the heart of the advice process, going forward, was an effective means of measuring a client’s attitude to risk(ATR) and applying this to the asset allocation within a client’s portfolio.

The Personal Touch team believes having a good approach to understanding and explaining risk helps advisers, at the point of advice, to create a two-way engagement and that engagement will grow the relationship as the attitude to risk and asset allocation are revisited at regular intervals.

Having made the decision to invest in an ATR solution that it believed would drive significant client benefit, the team was delighted to see the FSA issue a paper in January that mirrored its own thinking. However, the Personal Touch team felt the FSA paper appeared to criticise the current tools and processes in the market.

The team was particularly concerned by comments around the accuracy of some of the current systems and the matching of the systems to provide suitable portfolios. It also noticed the inference that a better audit trail of how tools were used was frequently needed to show when they were used and how the outputs were implemented (or not).

With this in mind, the team decided to create a solution that had to be more than just an electronic ATR and included asset allocation (to ensure the relevant matching funds for each profile were chosen).

It also needed to be integrated into the wider infrastructure that Personal Touch members have – especially Toolbox – to ensure an audit trail was created. It was the team’s belief that this level of integration could only be achieved if it was built in-house, calling on specialist expertise as needed.

Building the questionnaire

To acquire the specialist skills, Personal Touch partnered with Oxford Risk to get the right questions into the questionnaire and chose Rayner Spencer Mills to drive the asset allocation models.

With the help of Oxford Risk, it created a 15 question-set ATR. The team had originally aimed for a ten-question solution but the specialist knowledge brought to the party by Oxford Risk illustrated that a ten-question system would have an 86% accuracy rating whereas a 15-question system would have 90% accuracy. The trade-off of increased time to complete against improved accuracy was considered worthwhile.

AT8 would concur with this balance being in the interests of customer outcomes and to mitigate risk for advisers. Indeed, if you look at the Australian market, which in many ways is more mature in financial planning terms, questionnaires typically have 30 or more questions (which many argue is overkill for the UK market).