In the Dec 2009/Jan 2010 edition of Connection, we demonstrated a conventional approach to conducting research for personal pensions using Synaptic Product Research. This was geared around the basic concept of starting with a full list of pension products available, then eliminating products that do not meet your client's needs based on the features of the product and/or the sectors available for investment. The process culminates in ranking the remaining shortlist of products on various criteria, through to the production of a suitability report.

This approach provides a demonstrable audit trial and evidence for compliance purposes as to why one product has been selected over and above the others available on the market.

In recent years there has been notable shift in the way that some advisers approach their research, with the initial emphasis being around the fund selection in line with a clients' attitude to risk and then the subsequent identification of a suitable product wrapper that allows access to those funds. Synaptic Product Research combined with Synaptic Fund Research offers the functionality to apply this approach in practice.

Whether the categories are low/medium/high or a 1-5 scale, every client has a tolerance for how much risk they are prepared to take. This can of course depend on the purpose of that investment and can change as a clients life circumstances change. Having identified the current attitude to risk, the key is then to translate that into fund selections and this can be a complex process. As such, more and more firms are outsourcing to consultant experts who consider the asset makeup of funds and create model fund portfolios to suit a range of risk profiles.

In 2011 Capita Financial Software (utilising model portfolios from acknowledged leaders in their field Barrie and Hibbert), expect to deliver the next module of our new generation of adviser tools – 'Modeller'. Using economics based stochastic modelling this new tool will enable a seamless link between attitude to risk, mapping risk to asset allocation and identifying a fund portfolio that is consistent with those needs.

In this guide, we are assuming that the required funds have already been identified and then we will demonstrate how to incorporate those funds into product research for personal pensions (although the process can be applied to any pension or investment wrapper). You will need to have access to both Synaptic Product Research and Synaptic Fund Research in order to make use of this process. If you need access to one or both of these tools, please phone 0800 783 477 for a free trial.

Log in to the software as normal (go to www.capitafinancialsoftware.co.uk. The Synaptic Research login is located on the right hand side of the screen). Once logged in, select the Investment tab from the home page. Under the 'Fund data' heading you will see a menu of options. Select the last item from this list called 'Manual fund list' by clicking on the blue text (Fig1).

Fig 1

This will take you to the client screen as normal where you can opt to enter your client details.

Conversely to product research where you start with a list of all available products and filter these down, with the manual fund list you need to build up a list so the next features screen does not list any funds until you have added them. In order to do this, click on the 'add a fund' text as shown in Fig 2.

Fig 2

Enter the required fund name and click on the 'Find' button in order for a list of funds matching the text to be listed. Tick the box(es) alongside the desired funds and then 'Save selection' (Fig 3). This will add those funds to the grid on the main features screen.

Fig 3

Continue with this process until the all the required funds have been added to the grid on the main features screen. Please note that this demonstration is using two example funds only and in no way constitutes a suggested fund or portfolio.

You can then change the title of your fund list to something memorable or appropriate to enable you to locate it again easily at a later stage in the research process (Fig 4 & 5).

Fig 4

Fig 5

The manual fund list has now been created but there are some other functions to highlight at this point that you may find useful as part of this process.

The 'Availability' option (see Fig 4) allows you to view the wrappers available for one or all of the funds. In Fig 6 & 7, Personal Pensions have been selected as the product type but any product types can be selected here to view the fund(s) availability.

Fig 6

Fig 7

Go 'back to research' and select 'Portfolio' (see Fig 4). This enables you to enter a monetary amount or percentage weighting for the funds and by selecting the 'Report' you will get a combined factsheet based on your portfolio of funds which can be saved in PDF (Fig 9).

Fig 8

Fig 9

In order to apply this manual fund list to a piece of personal pension research, go back to the home page by clicking on the Capita Financial Software logo on the top left of the screen.

This time select the 'Pension savings' tab and from the list of options select Personal Pension (Fully Insured) by clicking on the blue text. Enter your client details on the next screen then click 'Start research' to access the personal pension features screen. Here you will find a list of product features that can be used as filters to eliminate products that are not in line with your clients needs.

Features listed in bold have further sub features that are displayed once you have ticked the heading. By right clicking your mouse over a feature, you will be able to view the feature definition. If you left click on the feature title without ticking the box, the software will add those features as columns in a data grid on the right hand side of the screen. This allows product comparison without eliminating products from the research process (Fig 10).

Fig 10

Further filtering is also available from the sectors tab so that any products that do not offer funds from within the sector selections can be filtered out from the research process. This screen offers a choice of sector classification schemes – either the traditional ABI pension sectors or Financial Express global sectors. However, for this particular demonstration, we will not be making a sector selection but will be importing the manual fund list that was prepared previously.

In order to do this you will need to scroll down the very bottom of the sector list until you reach the section that says 'import from a manual fund lists' (Fig 11).

Fig 11

Click on this text and you will be presented with a choice of all your manual fund lists to select (Fig 12).

Fig 12

Select the desired fund list by clicking on it. You will then be returned to the sectors screen but further filtering will have been applied based on the funds in your portfolio (Fig 13). The filtering on fund availability takes into account whether contracts provide access to the fund(s) directly or via external fund offerings, also known as 'mirrored' or 'wrapped' funds. In this example, which requires both the Fidelity Special Situations and Schroder UK Mid 250 funds to be available, we can see that traditional life offices and platforms can both provide access, even within a personal pension wrapper. An example of a supporting platform is Transact; in this case the platform offers direct access to the unit trust and OEIC. Scottish Widows also supports this requirement, but via its own external pension range, which includes the Scottish Widows Fidelity Special Situation (S4) and Scottish Widows Schroder UK Mid 250 (S4) funds.

Fig 13

Audit trail.

More filtering is available through the conditions and stats tabs to further reduce the products listed to a shortlist of only those that are suitable for your clients' needs.
At any time during the filtering process, you can select the 'audit trail' button to pinpoint where products have been excluded from the research process. This is located at the lower part of the screen underneath the features/conditions/stats lists on the left hand side of the screen and can be saved separately in PDF (Fig 14).

Fig 14

Select 'Back to filtering' and then click on the 'Ranking' button to proceed to the ranking section (Fig 15).

Fig 15

This will allow you to rank the remaining products on one or more of the options available. You are able to determine the appropriate level of importance of each (low, medium or high).

Fig 16

Some ranking options are specific to the product provider, such as their financial strength (of which there are two sources to select from). Other options are specific to the product.

Once you have selected your options, click on the calculate button. Synaptic Research will perform a series of calculations for the remaining products based on the ranking options selected and their relative importance. The results are displayed in a simple, easy to read format (Fig 17).

Fig 17

Individual scores for each ranking option can also be viewed when clicking on the appropriate coloured tab:

Fig 18

You will now be able to select 'Report' which will enable you to select the recommended product from the list by clicking on it.

Once highlighted, you have a choice of report formats – a quick standard report, a product fact sheet or full suitability report.

For an online demonstration of Synaptic Research or more information regarding any of our products, call 0800 783 477.

Note: all items selected in this example guide are for demonstration purposes only and do not constitute professional advice. All data correct as at December 2010. Source: Synaptic Product and Fund Research.