Planner needs driving platform developments

Mike Taylor writes that platforms are rapidly evolving to meet both planner needs and Australia's rapidly changing demographics — something which has given rise to the availability of annuities and in the future will likely give rise to aged care options.

Financial planners may not always feel like they are holding the whip hand but in the case of platform investment and development they do.

Any examination of the research undertaken by leading research houses, Investment Trends and Wealth Insights, reveals that market leadership tends to go to the platform provider which most appropriately meets the needs of financial advisers.

Thus, in the case of the most recent Investment Trends Platform Report, two relative minnows in the form of netwealth and HUB24 emerged amid the heavyweights such as Colonial First State FirstWrap, Asgard eWRAP, and MLC Wrap and Navigator, to take first and third place respectively for overall platform functionality.

The Investment Trends analysis left little doubt that the decisive factor for the likes of netwealth and HUB24 was the utility they provided to planners.

"HUB24 has been one of the stand-outs when it comes to providing advisers control over the information displayed on the adviser dashboard," it said.

"Customisable tiles or ‘portlets' provide information on key business metrics to advisers, and on areas of interest to their clients."

Similarly, when referring to the success of netwealth, Investment Trends noted that the platform had ranked first for transaction tools, decision support tools, and online business tools.

Wealth Insights managing director, Vanessa McMahon, has been reviewing the platforms market for more than a decade with her company's highly respected Service Level Report, and is firmly of the view that functionality is the key determinant.

Drawing on a sample of around 1,200 financial planners, McMahon has noted the degree to which simplicity and functionality has tended to trump the provision of diverse menu options.

In the latest Wealth Insights research, Colonial First State justified the high levels of investment it injects into its platform offerings with Colonial FirstChoice and Colonial FirstWrap being ranked one and two respectively by planners, ahead of Macquarie Wrap Consolidator and Macquarie Wrap Manager.

Investment Trends head of research, wealth management, Recep Peker said his company's research pointed to planners looking to platforms as a means of achieving the efficiencies necessary to allow them more time dealing with clients.

"Where planners make their profit is in their on-going relationships with clients, and they want the platforms to deliver more efficiency and therefore more client time," he said.

Peker said the Investment Trends research suggested 80 per cent of planners were looking for greater efficiency from their platforms and as many as two-thirds were looking to have planner software engagement tools made available on platforms.

Investment Trends senior analyst, King Loong Choi, pointed to the degree to which platform providers had sought to meet the needs of planners.

He said adviser support had been a key area of focus, with many platforms improving the navigational efficiency of their adviser support pages, noting that BT Wrap, CFS FirstChoice, and North Online had all launched new adviser support tools, or redesigned previous adviser support pages to make it easier for advisers to find the information or help they were looking for.

He pointed to BT Wrap's BT Adviser Centre as being notable as a one-stop-shop for advisers to gain access to strategies, production information, blogs, practice management tips, super contribution strategies, and continuing professional development (CPD) points.

"We have continued to see platforms provide advisers support from new angles rather than just the traditional ‘how to use the platform better' guides," Choi said.

"Key areas of focus include providing strategies which advisers can use to enhance their businesses, and the ability for advisers to easily share research/education with clients to help lift their engagement."

Choi might have added that just about every platform provider had been investing in meeting planner needs, with Macquarie Wrap having introduced its Portfolio Review Report, and with AMP having introduced its MyAMP client portal available to clients on both AMP Flexible Super and North Online.

While scale and deep pockets have been the factors which have served to ensure Colonial First State, Macquarie, BT, and even IOOF have remained close to the top of the heap in terms of planner rankings and attitudes, the rise and rise of relative minnows such as HUB24 and netwealth can be attributed to an astute use of market knowledge and technology.

Peker noted the degree to which netwealth and HUB24 had risen up the adviser satisfaction rankings saying this had been attributable to the functionality the firms had built into their offerings with the right tools being provided at the right time.

However he noted that the human element had also been a factor, with the adviser support provided by netwealth and HUB24 via their business development managers also having played a key role.

Scope for new entrants

For more than a decade there was a widely-held belief in the financial services industry that the level of investment needed to get a successful new platform off the ground was such that it acted as an almost impenetrable barrier to entry.

However, technology has gone some way towards changing that perception with developments in the self-managed superannuation funds (SMSF) administration arena and elsewhere pointing to possible vulnerabilities in the current market mix.

While Colonial First State, BT, and Macquarie have taken the organic route by seeking to inject both technology and a product options into their existing platforms, IOOF has looked to both the organic and acquisitive routes.

It is hardly surprising then, that HUB24 drew the take-over attention of IOOF and there is now speculation that the highly acquisitive Melbourne-based company is now similarly interested in netwealth.

This would be consistent with IOOF's much earlier interest in acquiring AXA Asia Pacific's North Platform as part of an unsuccessful bid by National Australia Bank and IOOF's continued focus on driving maximum synergies by consolidating its existing platform holdings —something which was made clear in the company's results announcement to the Australian Securities Exchange (ASX) in early August.

At that time, IOOF managing director, Christopher Kelaher, referred to the company's strategy of simplifying its core wealth management business, including platform consolidation.

He said this had entailed the company transferring $7.1 billion of client funds and 40,000 client accounts from its The Portfolio Service (TPS) platform to its Pursuit platform.

netwealth is tightly held by the Heine family which may not be attracted to a sale, but a successful acquisition of the platform business would deliver IOOF a significantly increased reach into the non-aligned adviser market.

The evolving platform

Platforms are evolving not only to reflect planner needs but also to reflect Australia's changing demographics.

In the past half decade, platforms have evolved to include a range of new products such as annuities and, almost counter-intuitively, managed discretionary accounts (MDAs).

While MDAs were traditionally seen as both an alternative and possible threat to investment platforms, Peker has pointed to the manner in which they have increasingly become a part of the platform landscape, probably reflecting the degree to which they are being used by financial planners.

The managed account option on a platform is widely regarded as having been pioneered by HUB24 and has subsequently been followed by netwealth and a number of the majors.

The degree to which managed accounts have become a reality on platforms is indicated by netwealth's data.

That data shows that in 2008 only one per cent of financial advisers could access managed accounts on their preferred platform, growing 10 per cent in 2013, and to 25 per cent in 2016.

Colonial First State's general manager, products and investments, Peter Chun, was at the forefront of seeing annuities placed on the CFS platforms and recently told Money Management's Fintech Platforms and Wraps Conference that platforms have evolved from traditional administration vehicles to holistic ecosystems capable of assisting advisers to help their clients through their life changes, including retirement.

Chun said platforms would need to facilitate the delivery of advice across each life stage from accumulation, to income streams, aged care, and then intergenerational wealth transfer.

The CFS executive also made clear he believed that platforms would continue to evolve to meet the business needs of planners — something which would give rise to interconnectivity, including with Government agencies.