All too often, sadly, this is not the case. Technology at its worst is far more of a liability than an asset, when it simply doesn’t work.
When selecting a platform, it is this ‘usability’ of the actual technology that can have a far bigger impact on adviser businesses than the difference between a few basis points, the cleanest of clean share classes, or the elusive smallest platform fee available.
A platform’s technology must be fit for purpose. There are many arguments put forward about how businesses need to enable technology to do ‘the work’, leaving the people free to do the other, more complex tasks. But good technology has to do more than that – it has to actually work for the adviser.
Platforms no longer just provide a simple online trading function. A huge variety of assets can now be held, in a multiple of tax wrappers, all of which have to be properly maintained and have to fit with the shifting sands of changing regulations.
Platforms and the technology behind them can now offer considerably more. A platform should enable the adviser to deliver an enhanced proposition in a cost-effective manner, mitigating risk in the process.
But what does the adviser actually want from their platform? What is their intended purpose?
Some might demand access to a broad investment range – including esoteric investments such as gold, commercial property or fine wines – others might focus on the suite of portfolio-building and management information (MI) tools available or the size or financial strength of the platform.
Recent research, however, has shown that what advisers value above all else is the support and value to their bottom line that a platform, and the technology behind it, can provide to their business models – in other words the value of straight through processing.
It is this technology that is driving the efficiencies. To be profitable in the world of shrinking margins, platforms and advisers need to get a good return on capital, not just write business at any cost. If the business loses £50 for every £1,000 of business, why would you want to write £10,000?
In recent times, there has been a detectable shift in the priorities of platforms and supermarkets – a technology “arms race” The Lang Cat’s Mark Polson described it, with a host of platforms announcing a review or revamp of their back office and front office systems.
To name but a few, Skandia last year announced a deal with IFDS to run their administration for 20 years, Alliance Trust announced a technology build and Ascentric went with Bravura. Standard Life also announced a “revamping” of its technology, originally designed by FNZ.
Operational efficiencies are critical for success and will become a key differentiator as the adviser landscape continues to change. Re-keying, power outages and downtime are becoming less acceptable to advisers. The uptake of platform online investment tools and models is increasing.
Technology is becoming increasingly important in the platform space and, most importantly, has to be fit for purpose.
Technology is supposed to make our lives easier, but can only do so when it actually works.
We are led to believe in the importance of owning a phone unlocked with a thumb print that can check our investment portfolio while giving directions at the same time. And there is little doubt that a Peppa Pig iPad download has enabled many a flight/car journey to be spent in relative peaceful tranquillity.
But, all too often, when technology, is not fit for purpose, it only serves to makes things harder.
When it comes to platforms, technology should be most importantly usable, but also almost invisible – matching the adviser business needs by providing exactly what is demanded of it.
This is surely more important to an adviser and their business than a few basis points.
Pippa Russell is manager, corporate department at Novia
PLATFORM TECHNOLOGY
WHAT ASSETS DOES IT NEED TO SUPPORT?
The technology behind a platform supports the adviser when selecting from an increasingly varied pool of investment instruments. Depending on the client and the platform, these can include:
• Unit trusts.
• Oeics.
• Investment trusts.
• Direct equities.
• Unregulated funds.
• Alternative investments such as structured products.
• Hedge funds.
• Exchange-traded funds (ETFs).
• Exchange-traded commodities (ETCs).
• Cash deposits.
• Access to discretionary fund managers, both active and passive.
TECHNOLOGY BENEFITS
SUPPORTING ADVISERS
Technology can also support an adviser through a range of reporting solutions. All platforms offer different solutions, but these can include:
• Fund charting – A way to check past performance, compare funds and obtain fact sheets.
• Portfolio scanning – The ability to look through a clients portfolio and show the asset allocation, geographical /sector splits, top holdings, risk rating, performance and return over benchmark.
• Portfolio performance review – By taking into account actual cash flow and charges, we are able to show a money weighted rate of return on the clients portfolio. This can also be compared against a benchmark of your choice.
• Model portfolio evaluator – Evaluating a client’s portfolio against selected model portfolios or range of portfolios and/or individual funds.
• Lifestyle planner – Demonstrates the progress towards objectives, identifies shortfalls in savings, looks at requirements for increased investments and shows the impact of changes made in the risk/return profile.
