Since they first emerged on the adviser scene, platforms have not only revolutionised the way that financial plans are constructed and delivered – but also changed the dynamics of the retail wealth market itself.
Prior to their arrival in the early 2000s, this was a market dominated by life companies and their products. The adviser’s job of maintaining well-rounded, fully considered financial plans for their clients was made difficult by the disparate, unconnected nature of their accounts and wrappers.
Since their arrival, advisers have (quite rightly) taken centre stage. Armed with technology to quickly and easily consolidate these once separate holdings into a single account, they have been able to unlock new levels of business efficiency – not to mention client experience.
Plans that would have been too sophisticated, difficult or expensive to put into place soon became the mainstay of advice. And, with the entire investment universe at their fingertips, advisers soon became the most significant actors within the industry – building close and exclusive relationships with their clients in the process.
Platforms, then, have been instrumental in driving operational efficiency, improving investor experience and strengthening adviser-client relationships.
But just as the platform technology disrupted the advice market 20-odd years ago, recent developments from outside our industry have laid the ground for another period of change and evolution…
The transformative power of APIs
Over the last two decades, technology has fundamentally changed established norms – altering the way we live, work, travel, communicate – even eat.
Chief among the drivers of this change is the ‘API’ (or ‘Application Programming Interface’). For the uninitiated, an API is essentially a bit of code that allows one piece of software to easily ‘talk’ – that is, send or extract information – to another.
They have driven enormous technological progress across all sectors, by dramatically lowering the barriers to innovation. Instead of having to build every bit of new functionality from scratch, technology providers can instead ‘plug in’ to pre-existing services – meaning they can deliver a rich and rounded experience at a fraction of the time and cost.
While APIs have transformed pretty much every other sector (to put it in perspective, there were a staggering 5bn calls a day on average to Facebook’s API in 2016), their adoption in the adviser technology marketplace is still low. In fact, the software that underpins the platform market has barely changed since their first launch – a fact to which most hard-working administration teams will likely testify.
For context, research by Origo conducted in 2019 showed that most advice businesses typically use five standalone systems in the delivery of advice, planning and portfolio management – and two investment platforms. While 85 per cent believe that a lack of integration between these systems creates major internal efficiency, as staff are forced to rekey the same information between them.
In short, managing client portfolios on platform still requires plenty of administrative effort – negatively affecting firms’ ability to control and optimise their own client experience.