Client management systems pose threat to platforms, says McKenna

5 November 2009 8:11 am | By Tracey Scott

McKenna says when the platform market took off in the UK many providers argued that they could make client management software obsolete. But McKenna says he is now starting to see significant concerns in the life and pension provider community at the power a small number of quality CMS providers could hold.

He says: “Some years ago a number of client management systems started referring to themselves as potentially a ‘wrap of wraps’. It is now becoming clear quite how accurate this was.

“Given their enhanced ability to service legacy life and pension products and manage a far wider range of activity within adviser businesses, such as TCF, Gabriel reporting and Icob/Cob business, combined with the FSAs proposal to outlaw the supply of systems an adviser relies upon to run their business as an inducement, it is not realistic for a platform to try to replace the CMS.”

McKenna says a majority of platforms have never fully addressed the legacy assets issue whereas the CRM market can address that.

He adds: “Many platforms business models assume they will be able to cannibalise the life and pensions community, perhaps they need to look out to see if they are under similar threat?”

Threesixty partner Phil Young disagrees. He says: “Core to the strength of the platforms is their ability to provide reliable, usually daily priced valuations, by acting as nominee.

“The CRM equivalent, contract enquiry, has never and will never provide an adequate solution for the vast majority of advisers. Nor will a CRM ever provide the trading functionality that a platform offers.”

However, while Young says most advisory firms view platforms as a way of outsourcing admin, which CRMs cannot provide, he adds: “I do agree that CRms are unlikely to be overtaken by platforms though, and believe that the financial planning process will increasingly sit on CRMs or front office applications, with the platforms handling the data aggregation and transactional side of the work.”

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