Advisers who know me from my days working with life and pension trust companies often ask why I am so effusive about platforms and what they can do to help them and their businesses, writes Novia Global managing director Steve Andrews.
In response, I point out that we are now operating in an increasingly digital world and that the role of platforms in delivering efficient financial solutions has evolved greatly in recent years.
One fundamental thing I stress is that a platform is not a product but best considered by them and their clients as a service delivered to both.
This is best illustrated by advisers themselves on the testimonials page on platform websites and where I direct people who pose this question.
A generic term
To illustrate this, I point out that companies that are familiar to everyone as household names – such as Amazon, Google and Uber – can also technically be considered platform providers.
Their business models are not simply all about sourcing new customers, instead they connect users to corresponding suppliers. When you look at it like that investment, platforms are no different in practice from these online retailers.
The Financial Conduct Authority =definition of a platform is ‘a service that distributes retail investment products which are offered to retail clients by more than one product provider’.
Put another way, it is a provider that sits between the portfolio investment holdings and the end investors looking to purchase them. Think about someone using the Uber app, which connects passengers looking for a ride with drivers who can take them to their destination.
Look through another lens
As already stated, it would be a basic mistake to simply view platforms as a product instead of a holistic service, and a position that ignores their true value to an adviser business in 2021.
These days, they offer so much more, for example by digitally enabling the integrated management of customers’ retirement/investment market risks.
By replacing a manual/paper-based process with one that is online, it eliminates the wasteful duplication of administration while providing a robust control environment – ultimately, this all adds up to advisers being better placed to deliver better client outcomes and, importantly, with the confidence that they are doing this in a compliant manner. It’s also incredible the difference that some simple reporting can make to a business, so if you don’t have any reporting set up then just a simple solution like that can make a huge difference to your business.
Where a platform is adopted as an adviser’s primary tool for managing and overseeing a client’s long-term savings, unlike traditional life company solutions, they can enable advisers to implement compliant and comprehensive financial planning strategies.
This is by way of easily aggregating pensions and general investments in the same place, usually with an aggregated ‘dashboard’ view for simplicity.
Therefore, they represent a way of seamlessly doing business in the face of increased regulatory and compliance pressure with digitised record keeping ensuring easy monitoring of client investments.
In simple terms a platform usually provides custody, aggregated trading, tax wrapping, reporting and open-architecture access to a wide range of differing assets. In practice, this is via an online system that makes it easier for a client’s financial plan to be implemented – with advisers able to trade, safeguard, administer and track investments across a range of product wrappers.
For advisers, that means providing straightforward and low cost access to the assets and products that their clients want and also the tools they need to reduce the time they spend on administering this relationship.
Interaction and engagement
For a successful platform partnership, the provider also needs to ensure that there is a user-friendly client interface too. This is vital because this is how they will ultimately ‘experience’ their financial planning.
However, not all investment platforms are the same and don’t offer the same services and functionality.
What services a platform provides will determine how the client will interact with their investment and pension plans. Some platforms are built only to support the advisory process, assisting advisers to offer an excellent client experience.
Other platforms, however, are built for the direct market and give the non-advised end user simplified and basic information on investments and wrappers that they hold.
Overall though, regardless of type, either style must ensure a positive outcome and user experience in order to be seen as a success and widely adopted by advisers and clients alike.
Having evolved greatly over the past decade, platforms are now seen as mainstream and have revolutionised the way that they interact with the global advice market.
With the assistance of increased and tighter regulatory regimes globally, they have challenged the status quo and legacy offline solutions, engineering a new way forward along the way.
With this environment likely to continue into the post-covid future, adoption of a platform service into an adviser business model is key for them to keep up with this pace of change and more critically, still remain relevant and of value to global client and their demands and expectations.
This article was written for International Adviser by Steve Andrews, managing director of Novia Global.
