Regulatory compliance absorbs half of platform development spend

Regulatory compliance absorbed approximately half of platform development expenditure in 2013 but intense competition continued to drive improvements in functionality, according to a new report from leading wealth researcher Investment Trends.

Based on comprehensive face to face reviews of 25 leading master trust and wrap platforms, the tenth edition of the Investment Trends Platform Report is an in-depth study of the investment platforms used by Australia’s financial planners. The report covers 454 key characteristics of each platform and its associated service offering, providing a unique insight into the competitive standing of each provider and emerging trends across the industry.

Of the 13 platform providers assessed, 8 provided information on both their development and regulatory compliance expenditure separately. It was found that their spend on developing new functionality was only slightly greater than their spend on regulatory compliance.

With platforms addressing many of planners’ pricing needs over the past few years, financial planners started calling for enhancements to usability, reporting and support. Platforms have focused developments on addressing these needs in 2013.

“Regulatory compliance has absorbed approximately half of platforms’ total development expenditure, but the platform functionality arms race has continued,” said Investment Trends Senior Analyst Recep Peker. “Platforms continue to evolve through offering planners tools that help them run their business more efficiently while meeting their regulatory obligations.”

“Platforms have been very responsive to planners’ needs. Common areas development focused on at an industry level include enhancements to usability, adviser support, reporting, direct shares and corporate actions functionality, while building Fee Disclosure Statement functionality from scratch.”

“The level of development is reflective of the high level of competition in the industry. Platforms can very easily be overtaken by rivals if they do not keep innovating and meeting planners’ needs.”

Platforms varied greatly in their Fee Disclosure Statement readiness

Under the Future of Financial Advice (FoFA) reforms planners are required to issue their clients a statement detailing the services they provided and associated fees charged. Our May 2013 Planner Business Model Report found that the administration of Fee Disclosure Statements (FDS) was one of the top FoFA challenges with 48% of planners raising it as an issue.

Platforms’ response to FDS has been varied. A couple of platforms are still waiting on the reforms to find more concrete footing, while others gave planners a CSV document detailing the fees and leaving it to them to establish their own ways of delivering on their FDS requirements.

The majority of platforms have gone further, with functionality tracking key dates and services provided, alerts and FDS generation. The most feature-rich FDS functionality was delivered by Asgard eWrap, which includes bulk (multiple clients at the same time) FDS generation.

The top four platforms by FDS functionality are:
1. Asgard eWrap
=2. Macquarie Wrap
=2. Perpetual Private Wrap
4. BT Wrap

CFS FirstWrap continues to lead while netwealth, Asgard eWrap and HUB24 make substantial gains

Among full-function platforms (those supporting planners advising on a wide range of investments, including direct equities) CFS FirstWrap achieved the number one position in terms of overall functionality for the second year in a row. The five top-ranking full-function platforms were:
1. CFS FirstWrap
2. netwealth
3. Asgard eWrap
4. MLC Wrap & Navigator
5. HUB24

FirstWrap also ranked first for product offering and was assessed to have the best navigation and user interface.

“CFS FirstWrap remains number one in the industry with the highest score achieved in the ten years of the study. FirstWrap’s refresh has made it the best in terms of navigation and usability,” said Peker.

Recent enhancements introduced by FirstWrap include:
– Revamped Adviser Dashboard, making key platform features and client account information more accessible to planners while adopting a modern look and feel
– Actionable task listings, alerts and management all from the homepage
– Customisable quick links toolbar to give advisers quick and easy access to parts of the platform they use most frequently
– Easier client account establishment and management functionality
– Enhanced direct equities capability, including online corporate actions and DRP

Linear was the platform making the greatest advances in functionality, deploying retail superannuation, retail insurance, a collared product allowing SMSF clients to obtain limited recourse loans on domestic and international shares and many other new improvements.