Following numerous reports reiterating that advisers are still using two or three platforms, Warren says this confirms how “we seem to have gotten further away…from finding the solution that platforms were meant to deliver 15, 20 years ago”.
“Planners are still desperately trying to…simplify their business by using one vehicle – a platform to manage all of their client base,” she says.
“Instead of getting that, you’ve got a dilution of the so-called advantage of using a platform.”
Burgess says platform providers will find this shift a challenge, but if they can get to the front, it will ensure their survival.
“It comes down to knowing that there’s a trend towards using fewer platforms; therefore as a platform manufacturer, you really have to compete hard to get in that sweet spot of that two or three [platforms] that an adviser practice may use.”
ONE PLATFORM FOR LIFE
AXA’s newly updated North platform recently came out with the proposition that it would be “one platform for life” – that is, a solution that will stay with an investor from the early accumulation phase of their life, all the way through to retirement, and then beyond.
Gale says young investors will be the next big opportunity, although he admits it’s hard to be profitable at that end of the client base.
“In the past, it was quite hard to use a platform for a younger client because you’d need a reasonable amount of money to start – $20,000 in super was a bit too big,” he says.
“What we’re going to find now with platforms is that if you get them young and can keep them for life, they are a very valuable client,” Gale says.
“If platforms are more efficient, it’s going to allow us to operate in a market slightly below where everyone currently does [business].”
ONGOING EVOLUTION: TECHNOLOGY
With competition set to become even fiercer in the future, the opportunities for platforms to grow will emerge from the technology side of an offering. The complexity of platform software heavily affects usability – so this is an area that must be focused on to encourage evolution.
Delaney says there is still a resounding call for a streamlined process coming from financial planners.
“I’ve got no doubt that if you talk to financial planners they would still express some frustration at the level of integration; for example, the interfacing between different industry systems.
“If you look over this period [of 10 years], there has been a significant level of progress, so expectations are now increasingly getting higher and higher,” he says.
“That’s putting more pressure on most players to really develop, particularly when it comes to interfacing.
“From an advice perspective, the efficiency of a practice is only going to be as efficient as its lowest common denominator – so if you do have a process that’s letting it down, then it is going to drive inefficiencies.”
MLC’s Clancy says comparing platform capabilities today versus 10 years ago is like “chalk and cheese”.
“Technology capability is really at the heart of platforms. It’s not just been in the last year that every platform’s been announcing technology improvement; that has been the case for the last 10 years.
“This will continue to be the case as technology continues to drive platforms forward.”
REGULATORY INFLUENCE
In order to survive, platforms must adapt in line with the yet-to-be-finalised FoFA reforms.
“That’s the million-dollar question. Some of these things are still very much up in the air,” Clancy says.
With uncertainty about where exactly the reforms will land, platform providers will face many challenges ahead, according to Gale.
“It’s about having some certainty so we can start structuring the business around FoFA,” he says.
“There’s a lot of wide-ranging statements that we need clarity on and that’s the challenge at the moment; you’ve got to plan for everything to happen, and if nothing happens.
“You’ve got to be willing to adapt,” he says.
“I don’t think there’s going to be a negative outcome, but it’s something that is in the back of a lot of people’s minds.”
Peker says that as a result, “43 per cent of planners believe FoFA won’t affect the platforms they use, and close to half said they will look for a platform that will reduce the cost of doing business or look for a lower-cost platform [for clients]”.
The potential abolition of volume rebates will be the most interesting space to watch, as varied business models still exist in the marketplace.
Clancy says MLC supports models where financial advisers don’t receive any volume bonus, but also models where they do.
“Today, we support both models. Whatever the changes are that are put into place, our platforms will evolve to meet the needs of financial advisers and their customers,” he says.
Gale says: “Volume bonuses, marketing allowances and rebated fees are going to be obsolete or be reworked, so this will be the biggest change that’s going to affect dealer groups and the actual platform providers.”
“From an advising point of view, I don’t think it’s going to have a large change,” he says.
“A lot of it [volume-based fees] is transparent, and most disclose it in the FSGs [Financial Services Guides], but they are talking about banning them. For some dealer groups, the volume bonus is a very substantial amount of income, so it will have a big effect on the industry and on platforms, because for some dealer groups it is a very attractive way to manage a business.”
