Big banks now also-rans in platform space

In what represents almost a reversal in the platform dominance stakes, the banks have been trumped by the minnows.

The latest data from Investment Trends reveals HUB24, Netwealth and Praemium sitting atop the list of platforms preferred for their features when, less than a decade ago, the top three positions were dominated by bank platforms such as the CFS, Macquarie Wrap and Asgard.

These days the big bank wraps are still mostly in play, but they have been supplanted by the technological agility of the newcomers.

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The Investment Trends 2020 Platform Benchmarking & Competitive Analysis report had confirmed the degree to which fortunes have been reversed,

It said that for overall platform functionality ranking, HUB24 had marginally overtaken Netwealth for top spot, with consistently strong results across all six assessed categories. In a close second position, Netwealth continued to perform strongly in four out of six categories. Industry wide, the five top-ranking full-function platforms are:

  1. HUB24 (overall score of 89.0%)
  2. Netwealth (88.9%)
  3. Praemium (84.8%)
  4. BT Panorama (82.4%)
  5. Macquarie Wrap (76.5%)

The Investment Trends report found that platforms were responding to calls from financial advisers to better support their socially distanced advice processes, with notable functionality improvements around electronic signatures and digital acceptance tools.

Commenting on the report findings, Investment Trends Associate Research Director, King Loong Choi said the platform industry was continuing to drive innovation and functionality improvements from the back-end to front-end, which was especially vital as financial advisers and their clients adjusted to a social distanced way of living.

Referring to the platform functionality scores, Choi said the narrow difference highlighted the intense competition between the leading platforms, many of which had made meaningful refinements to their product offering, reporting, decision support tools and integration in the last 12 months.

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There must be a lot of non rack rate deals by the top 3 on price, because every time I do a fee comparison they still don't match other platforms. Yes price is one thing, but with a platform it is a significant input into choice since most platforms do very similar things.

Not just platform admin fees, but account keeping fees and increasingly transaction fees. I can tell you that the top 3 are making up to twice the revenue of other competitor platforms per account/per dollar (looking purely at platform revenue sources). They may be feature rich, but I am still not sure this is in the best interest of clients.

These top platforms are pricing at an AFSL level. They look at client profiles and customize fees to suit the practice and typical client. The rates are negotiated on a total basis including all transaction fees - they are winning because they are delivering far better functionality, choice and service at reduced total costs. If you haven't engaged these platforms yet directly then you are doing your clients a disservice

Totally illegal to provide differential rates per licensee. In the end each client pays a different amount based on which licensee they are advised under. For super how can the trustee who is meant to treat all members equally justify this. APRA should be looking into this!

John, your comment is right on the money.

We are also very uncomfortable with platforms doing special pricing for some AFSL's. What if a client chooses not to be advised in the future - or the fair weather licensee decides it is too hard & shuts up shop - leaving the clients abandoned? All of a sudden the client is paying the PDS price which for the top 3 is not at all competitive. Right or wrong many inexperienced clients also like brand names (BT, MLC, Colonial etc) they are familiar with and use size and longevity as a proxy for extra security. I doubt if a single client of ours's has even heard of NetWealth or Hub24? That may change in the future but just like pricing client preferences have a place in an advisers professional considerations.

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