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Platforms must use tech to meet flexible income payment demand

Increasing demands for income payment flexibility from clients moving into decumulation will push adviser platforms towards upgrades.

Platform service levels have come to be a key must-have feature of the perfect platform for advisers, according to our UK Adviser Platform Guide, which tracks the features advisers rank among their top five criteria.

Low charges remain advisers’ main priority for platforms and nearly two thirds of them place it within their top five essential qualities for a platform.

But service is the most commonly cited top selection criterion –perhaps not surprisingly, given all the column inches dedicated to certain platforms’ struggles. Both service and usability have been gaining prominence, particularly for platforms that have been going through replatforming exercises.

Platforms face difficult second half after sluggish sales

Advisers are waking up to the fact that even if low or competitive charges are important for their clients’ portfolios, platforms need to be fit for purpose, with someone there on the end of the phone should any issues arise. The well-documented troubles endured by advisers using Aviva and Cofunds (now known as the Aegon Platform) should be a loud and clear wake-up call.

All platforms should be taking a closer look at their customer service and adviser support functions to ensure that when things go wrong they have set up the necessary framework to cope in the aftermath. Advisers are resoundingly telling us that poor service is the main reason for transferring client assets away from a platform.

adviser platform technology

Having a cheaper alternative for the client is often not the catalyst for platform switching. The narrative is increasingly about looking at value, rather than the outright charges.

Cost tends to be considered in conjunction with other factors when justifying a transfer of assets.

The latest issue of our adviser platform research has also analysed the varying levels of functionality and investment choice available across the major adviser platform providers. Two areas we have looked at are bulk rebalancing and pension income payments.

The FCA’s Investment Platforms Market Study interim report raised concerns about bulk rebalancing and switching on the grounds that they are potentially adviser inducements. However, model portfolio functionality remains one of the most mature features of adviser platforms.

Platforms criticised over sluggish rebalancing times and fund set-up costs

Creating advisory model portfolios, rebalancing models and adjusting the asset allocation in these portfolios are all core platform functions so it is hardly surprising that platforms’ efficiency at carrying them out is an important factor in advisers’ platform selection.

Another important platform feature should be flexibility in drawing down retirement income. The platform market is divided between those that allow advisers to set up regular payments on any date of the month and the others that are restricted to monthly payment runs.

Although advisers have told us about the importance of flexibility, platforms with the more limited regular withdrawal options say they have not received any significant feedback about this from their adviser users.

As more clients move into decumulation and become increasingly demanding about when and how they want their income payments, we think providers will be forced to use technology to become more flexible in this space.

Platforms are receptive to feedback and constantly have plans to improve the overall user experience, delivering better and more efficient outcomes for advisers and their clients. But as with any piece of evolving technology, platforms still have some way to go.

Andrew Ashwood is an analyst at Platforum



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There is one comment at the moment, we would love to hear your opinion too.

  1. For Income DrawDown, I’m amazed at how rare is the facility to draw a percentage of the value of the portfolio or just natural income as an alternative to a fixed monthly sum which, of course, raises the spectre of the bête noir of IDD, namely pound:cost ravaging.

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