AT8's Mark Loosmore assesses Defaqto Engage as part of his review of product and fund tools for advisers.
Defaqto is an established company that has been in operating since 1994. However, it went through a substantial change 3 years ago when it had a change of management and launched its core product Defaqto Engage. It now has 7,000 users from 3,500 firms and sees itself as the market leader.
Part of Defaqto Engage’s appeal is undoubtedly its breadth of research. As we had expected, it covers Life, Pensions and Investments, but it also covers banking products and they claim to be one of the only research tools to provide General Insurance comparisons at a Product level rather than price. The breadth of their research is made possible through their 60 strong research team – many of whom are from previous roles in Financial Services, including advisers.
The product takes the user through five stages of research:
• Collection of client information
• Product Type Selection
• Product analysis
• Product Selection
• Report creation
The data collection and product type selection are straightforward processes that are quickly passed through. The level of data collected can be very minimal and the product type selection is a simply tick list. Therefore, to get to the product analysis section only takes a few minutes. The product analysis stage is a little more complex but can still be quite quick.
However, there is a very long list of items that can be brought into the comparative analysis, to be used or switched off depending on what the adviser believes is important to a customer’s product selection. That having been said, it is also possible to create benchmark templates of items upon which to apply current and future reviews (determined at the company level or at adviser level).
In order to sift/filter the products that will be considered, it is then possible to rate and weight by degree of importance, so for example consider financial strength, or administration service etc. There are two ways the products can be compared – first a straightforward factual feature comparison, the second they call DNA (Data Numerical Analysis). The DNA comparison is a proprietary Defaqto methodology that enables points to be allocated to the different features and then provide rankings to be made from calculations run against these points – for example select the products with more than 30 points.
Once the sifting criteria is defined the selection routine is run, a list of the products meeting the criteria is displayed. These lists can be displayed as textual data or they can be compared graphically. They can be further refined by tightening the criteria at product or at fund choice and/or performance level. Information gathered through the system, such as the lists of products, the graphs or the selection criteria can be clipped and added to the final report. Defaqto has links with the adviser’s preferred portals (although Webline was not on the list). When the analysis is complete, the system will create a final personalised report for the client.
In addition to the Defaqto report, Defaqto has signed a partnership agreement with ATEB Consulting who market a ’Suitability Report’ tool enabling the distributor to create their own suitability letters quickly and efficiently.
It is worth mentioning a few value adds beyond the core functions of Defaqto Engage. Defaqto has recognised the importance of integrating they solution to other parts of a distributer’s infrastructure. We have written many times about the frustrations of stand-alone tools which force users to rekey data. Defaqto has therefore integrated their solution to several of the leading Back-office solution including 1st, Plum, Bluecoat, CCL and Quay, as well as the portals integrations mentioned earlier - namely Exweb and Assureweb.
Another value add that Defaqto promote is the research papers they produce. The research teams regularly cover a range of topics such as multimanager funds and these are provided free of charge to clients.
Defaqto Engage is a comprehensive product that shows the strength of its research heritage acquired over many years and so provides real benefits to IFAs. It isn’t the most engaging tool visually, but it does what it needs to in a logical way, though there are some aspects of its complexity in selecting the ‘issues’ and sifts that may put some people off. However, to a practiced user, it will provide a quick way of adding real value to clients wanting to deliver ad show that they provided whole of market advice.
This article first appeared in Professional Adviser.