A paper on the impact of the coronavirus crisis on investment platforms from consultancy firm Altus, published today (April 20), said there was an “opportunity for more progressive firms” to “differentiate themselves” by investing in adviser relationships and service.
In the paper, called Covid-19: Impacts on Investment Platforms, The End of the Beginning, Altus said: “Advisers and their clients are increasingly accustomed to 24-hour, instant servicing from other sectors and will expect this from their investment platform too.
“Flexing resource levels quickly and efficiently will become ever more important as demand dictates.”
The paper also said platforms’ distribution management had likely been impacted by the crisis, whether that be a reduction in call centre performance or an inability to perform certain functions they had previously been able to provide.
Altus said: “Adviser relationships [will be] jeopardised where platforms are unable to support advisers’ normal activities...and there is a risk of losing advisers if platforms are unable to support a new working model in the mid- to long-term.”
Platforms were urged to maximise and strengthen relationships with advisers by focusing on non-sales activity to develop a more personal relationship for a longer term benefit.
The paper also suggested platforms produce clear guidance about the impact of the coronavirus crisis on processes and service levels, and encourage a two-way communication to understand the impact on the adviser business to refine sales messages on how the platform could support them.
Ben Hammond, platforms director at Altus, told FTAdviser: “The current situation has forced platforms to make some of the quick changes they have been considering but not taking action on for some time.
“Their hand has been forced, but in a good way for advisers and investors. Platforms are focusing on providing a better and more flexible service that can stand up to different demand.”
Mr Hammond added there was a chance for platforms to “fix the roof while the sun was shining” while regulatory changes — such as investment pathways and share class conversions — were pushed back due to the crisis.
He said: “There’s always regulatory stuff and bigger challenges to tackle. But the regulator has kicked some things down the road which means people have time to do it.
“They should use this time to get their ducks in a row while the pressure from the regulator is off a little bit.”
Altus also suggested there would need to be a shift in the way platforms were remunerated, adding the majority using assets-based charges meant there was a significant revenue reduction.
It said platforms needed to improve efficiency quickly to offset this reduction in income and that successful platforms would find a way to transition from this approach to a more stable model.
Shelley McCarthy, chartered financial planner at Informed Choice, said: "[I] absolutely agree with this. Some platforms/companies have been quick to respond and added functionality such as digital signing of documents.
"Some of these changes have been long overdue. We need to be able to continue to work with our clients and if platforms are preventing us from obtaining information and processing contributions, withdrawals etc, then we will have to reconsider the platforms that are used."
Alan Chan, director of IFS Wealth and Pensions, agreed, giving the example that during the lockdown it was very difficult to ask clients to sign and return documents, particularly those vulnerable to the virus but that had not stopped some platforms from insisting on paper forms and wet signatures.
imogen.tew@ft.com
What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know.
