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Mark Polson: Platforms still have room for improvement

The Investment Trends research shows what advisers value in their platforms. Now platforms need to relate exactly how they can meet these need

This is the third year we have received Investment Trend’s platform sector data to pore over. We are now able to track how things are changing over time, and it paints a fascinating picture.

Last time round the highest adviser satisfaction ratings went to Transact, Nucleus and Skandia in that order. This time, Novia has pipped Skandia to third place. The first two are unchanged.

When we look down the various dimensions of satisfaction, it is notable that the results are incredibly consistent. Ascentric shows up in a few areas – overall pricing, pricing flexibility and adviser charging – Skandia is there for ease of use and navigation and reporting tools, and there is one new entrant to the table that will no doubt raise a few eyebrows – Aviva Wrap.

The York-based insurer has seen momentum accelerate for its Bravura-based wrap in the past 12 months, and last year broke through the psychologically important £1bn mark. With good results for value for money, level of fees/charges and ease of transferring data, it is now time for the ghost of Lifetime to be laid to rest. The new wrap’s simplified, ultra low-cost approach is paying dividends.

Notably, this time there are no nods for Standard Life Wrap (which did well last time) or Elevate. Now the RDR journey is well on its way, it will be interesting to see if they can claw it back. When you go through the league tables for each element in more detail, you also start to see True Potential cropping up regularly. Not enough to trouble the top three, but clearly it is doing plenty of things right and it will be interesting to see how its report card looks at the end of this year.

One thing that is very important is the need for platforms to be clearer about what value they offer to clients, not just advisers. After all, if clients are paying for the platform it is only fair that they should get some value from it. Over the past three waves of the Investment Trends research the average number of benefits mentioned by advisers has fallen from 7.4 to 7.0. The trend shows that platforms could do with spending a bit more time thinking about those who are actually trusting their money to them.

It is no surprise, then, that the two main barriers to increased platform usage are ‘no additional value to my clients’ and ‘too expensive’. Providers should take this as a challenge and work with advisers to show clients how they are adding value. If they could take some of the fat out of their charges too it would not hurt.

Last time we looked at platform attrition, it had increased from 13 per cent of advisers dropping at least one platform in the previous year, to 21 per cent. This figure has remained pretty steady at 20 per cent for 2012, showing that the market remains unsettled.

This figure is only for new flows. We all know that re-registration remains a challenge, and the unsettled nature of the market suggests that when automated re-reg registration really gets going we could see a lot of existing money moving around.

However, the number of advisers who say they definitely want to change platform in the coming 12 months has reduced from 26 per cent last year to 19 per cent this year. Those who deal with platform selection will not be surprised by this; many advisers wanted to get their house in order before RDR and have no intention of going through the exercise again any time soon. Tutoring fresh advisers in the ways of righteousness is going to get harder as the year goes by. It will be well into 2014 and maybe 2015 before the market really frees up.

One of the best things about the Investment Trends survey is that it asks advisers what they want from their chosen platforms. Last time wider investment ranges, better client reporting and better usability were top of the list. This time usability is a clear winner with 17 per cent. Wider investment still features with 13 per cent and better reporting is third with 12 per cent. More tools still comes way down the list, a testament to advisers’ good sense. There are still far too many proposition teams focusing on competitive differentiation through feature sets, when making the platform easy to use and providing information a client can understand and that makes the adviser look good are far more crucial.

In summary, this third of research wave provides a strong sense that the market is starting to move towards maturity. Adviser demands, likes and dislikes have solidified.

As market influence and power flows to planners post-RDR, that should increase. Some of the less dominant players in terms of assets under administration continue to delight their user base, and the market is open enough for a company such as Aviva to achieve cut-through with a clear, well-planned strategy, even if it is not for everyone.

On the minus side, adviser demands for better reporting and usability remain steady, which suggests there is still work to do.

Advisers need to be really clear with their platforms about what they want – not just ‘ease of use’ but the specifics within that. And platforms must listen, respond and act. Make it clearer to clients what the real benefits of platforms are and it will be a healthier sector when the next wave of this research comes around.

Mark Polson is principal at the Lang Cat

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

  1. Anthony Rafferty 31st January 2013 at 3:34 pm

    Another excellent piece of commentary Mark. And great to see Aviva getting some recognition for its simple, customer led strategy.

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