Industry leading adviser software provider Iress has snuck through a change that will require lock in annual contracts to its market dominant Xplan adviser software.
In an update sent to advisers, Xplan users will be moved on to a minimum term of 12 months, which will automatically renew.
One adviser noted that if an Xplan user misses the annual renewal reminder, or sells or merges their business, it could set up a very expensive end to the agreement with the service provider.
“It was just being snuck through with no fanfare,” the adviser tells Professional Planner.
“Xplan ends up being the whole centre of your business. They encourage you to store all your records with clients, file notes, to keep all your valuations of the client assets.”
The update from Iress said an Xplan agreement can be terminated once a year at the end of the annual term, which requires 30 days’ notice before the annual renewal date, otherwise the practice will have to pay another full year of Xplan fees. The agreement said Iress will send advisers a renewal a reminder 60 days before the end of the term.
“They’re walking all over small businesses who can’t fight back,” the adviser says.
“It’s extremely difficult and very debilitating to try and move your business. This is unconscionable conduct.”
Another adviser notes the lack of care for loyal clients was “staggering”.
Iress tells Professional Planner the changes have been made to better align with standard industry practice, but this is only one aspect of the update.
“Under our updated terms, Iress will give its customers greater periods of notice about other changes including changes to our fees and services,” a spokesperson for Iress says.
“Customers on our updated terms will have additional termination rights if they don’t agree with those changes. We encourage our customers to contact us directly if they have any concerns.”
These new terms will automatically come into effect in on 1 August 2024 for those users who signed up with Xplan after 20 May 2020; but for those who signed up to Xplan before 20 May 2020, the new terms will apply from 1 October 2024.
“Xplan is the biggest single bill to any external provider of services to my business and it’s a vital part of my business,” the adviser says.
Another adviser says that Iress sought to end many legacy “sweetheart” pricing agreements to instead standardise pricing, further agitating long-term users of the software.
Iress confirmed it has indeed changed legacy pricing agreements.
“Iress continually reviews its pricing and licensing arrangements with clients and last year this included some changes aimed at standardising pricing across a small number of ancillary services and the way we pass on the costs of third-party royalty fees,” the Iress spokesperson says.
However, the move is surprising given Iress reported client retention of 99 per cent during an investor presentation last November.
Xplan has dominated the software market in advice, even as advisers shift away from institutionally owned licensees and take more control of their tech stacks.
Iress sought to expand its presence in other parts of the advice chain after acquiring OneVue, which included its platform business.
However, after years of complaints of poor integration with other external providers and to launch its ‘Connectivity Network’, Xplan moved to sell-off parts of OneVue to help maintain neutrality, with Praemium picking up the platform part of the OneVue business in April.
The sale of parts of OneVue was announced as part of a business restructuring under new CEO Marcus Price, which included a 10 per cent staff reduction and divestment of parts of its overseas business in the first half of 2023.
But despite business changes, Iress’ has continued to struggle financially, reporting a $137 million loss in its CY23 results in February.
Iress’ GitHub user space was also hit with a cyber breach in May, and although an internal investigation has claimed no further evidence of unauthorised access, one adviser said they were only made aware about it via news article and not any direct communication.