In the past few weeks several practice management systems have outlined to me how they will enhance interaction with platforms and reduce the burden of conducting and implementing client portfolio reviews.
These are clearly not plans that have been dreamed up in the last couple of weeks since Intelliflo’s iMPS announcement, rather they are data projects that have been in hand for many months. There are two major initiatives which should roll out before the autumn and I will be writing about these as soon as they become public domain.
Seeing multiple software suppliers produce creative ideas to address what is generally a significant administrative burden for advisers is welcome and shows how much scope there is for improving existing operational methods.
While as the holder of the “single record of truth” practice management systems are well placed to drive these economies, they are not the only technology service in an adviser tool kit who could deliver such improvements. Portfolio optimisation and rebalancing tools should have a similar role they could play, indeed it could be argued that those systems are the most natural place for such automation to originate. Any changes initiated from a portfolio optimisation tool will need to be entirely and accurately recorded in both the practice management system and the investment platform. Ideally you would have some process to reconcile that the records are identical in all three systems as any variation could quickly become unwieldy.
After recent developments in the adviser software market streamlining how advisers can conduct portfolio rebalancing, obtain client consent and provide switching instructions on platforms looks set to become a key measure of platform suitability over the coming months, and it certainly should. What can be more important than helping advisers carry out essential tasks more effectively in less time and with a reduced risk of human error?
There is a further and very significant additional benefit that could come from platforms streamlining these processes. They could be used as part of the necessary mechanism for more automated platform switching services, something the FCA have been very clear that they are demanding be delivered during the next year.
For much of its 20-year existence the platform community has delivered valuable innovations for advisers in some areas while consistently failing to make other changes that would have vastly improved consumer and adviser outcomes. Much of this has been driven by a desire on the part of platforms to make sure key transactions are actioned on their real estate, keeping the platform brand front and centre. While this is a holy grail to many platform providers, it also fundamentally fails to recognise how a growing number of adviser firms wish to work. It certainly increases inefficiency requiring individual manual attention where streamlined electronic processes would work far better for consumer and adviser.
Growing numbers of external technology providers are now implementing their own ways to help advisers with what is increasingly recognised as a time-consuming and inefficient process that can also introduce risk to consumers. Platforms need to step up with their own ideas on how to make these interactions more efficient, if they don’t platforms will marginalise their roles and drive technology firms to further their penetration into the areas where platforms used to dominate.
It is important to recognise that two vertically integrated platform operators, True Potential and Benchmark’s Fusion platform interacting with Enable have made streamlining these processes a core part of the systems and indeed are the major features that stand out when you compare them with other platforms. My only reservation with each of the above is that from what I have seen they have not done enough to make it easy for advisers to use other platforms within their software. Personally I think they are missing a huge opportunity.
That True Potential and Fusion can streamline these processes does demonstrate other platforms could do the same if they wanted to. From what I am picking up in the market a small number of platforms are working on some very creative ideas using APIs with a handful of third-party technology suppliers. By Christmas we could see many new innovations in the marketplace which will help advisers increase their own efficiency and reduce costs while at the same time reducing risks for customers and delivering a better customer experience. All of the above should be things to which any platform would aspire and as we move to the market where these services are possible it must be inevitable that they will have an increasing impact on due diligence reviews.
It is increasingly looking like technology advances will rapidly drive the emergence of a platform 3.0 model with new services and capabilities that can deliver a far better customer experience. If platforms use this technology effectively it should also enable them to reduce some of their own significant operating costs.
Many platforms are still in the middle of migrating to new technology, others have recently completed such moves and it will be interesting to see if those currently going through system transformation are better able to pivot to meet these new needs, or will those who have already made such changes be better placed to adapt.
Either way the most successful platforms over the next three years looks set to be those who can best adapt to and embrace the streamlined working practices that are rapidly becoming a must have in any platform review.
You can follow him on Twitter @ianmckennaftrc