Technology solutions based on the capability of the technology provider more than on the needs of advisers must become a thing of the past, according to an executive director of netwealth, Matt Heine,
As netwealth finalises the mid-year launch of a separately-managed account (SMA) option for its investment and superannuation platform, Heine says independent organisations “do not have the luxury” of developing solutions that aren’t carefully matched to adviser and client needs.
“Having capacity and resources that are finite, the last thing we want to be doing is building IT solutions that aren’t going to get used or aren’t of interest to the end customer,” Heine says.
“We don’t have that luxury. And whilst we might not always get things 100 per cent right, the intention is that what we’re building will be of use and will enhance to overall offering to them.
“If you’re an institution you do have that luxury, because you’re got a tied distribution force. The market we operate in is largely IFAs – we’re talking 80 per cent of the business would be through independent or private-client firms, and if they don’t like the solution you put to them they just don’t use it. So we actually don’t have a lot of options in that space.
“Where you’re in a tied distribution scenario, if head office is telling you to do one thing you are, to some extent, obliged to go down that track.”
Heine says a growing number of advisers have clients effectively locked in to solutions built on old, inflexible technology, which is “a real problem for the broader industry”.
“If you look at some of the products that are still hanging around, there’s a huge amount of work being done to integrate and migrate some of those older platforms onto newer technology,” he says.
“Most of the major banks have got significant platform programs underway to migrate up to 15 or so legacy systems onto the next-gen or new platforms.
“It’s huge, and it’s going to take them years to do it, and it’ll be done in a staged approach. The volume of superannuation money these days just makes the job all that much harder. And the market is moving quickly: while people may be looking to move their back-books, new products and services are being developed all the time, so they have to keep pace with what’s happening in the market at that end, as well as migrating old books across.”
Heine says the netwealth SMA aims to address many of the perceived shortcomings in older SMS offerings that he says have held back the development of the market.
“We’ve been looking at SMAs and why they haven’t worked, and why they might work this time around, and I think that’s largely a technology discussion. What has been built has been stand-alone products, or products that they’ve tried to integrate broadly with platforms that have been pretty clunky, and whilst they’ve been a means to an end, they’re not particularly elegant solutions.
“What we’re looking to launch mid-year is very integrated, but it’s also requiring a lot of additional work to make sure it’s something that’s easy to use and, behind the scenes, quite elegant from a tax and transactional point of view.”