Regulatory compliance continues to dampen platform development expenditure

The December 2014 Platform Report, released to Investment Trends’ clients in December, is an in-depth study of the investment platforms used by Australia’s financial planners. The report covers 466 key characteristics of each platform and its service offering, providing a unique insight into the competitive standing of each provider and emerging trends across the industry. This year’s study highlights a number of interesting trends:

Regulatory compliance continues to dampen platform development expenditure

The 12 platform providers benchmarked collectively spent $173 million on developing new functionality and regulatory compliance in 2014. However, overall platform spend on new functionality took a hit in 2014, with the average Wrap or Master Trust reporting $5 million spent on developing new functionality for financial planners, down 22% from the $6.4 million reported by platform providers in 2013.

“Regulatory compliance remains a huge burden for most platform providers, absorbing in total 55% of the platform industry’s development spend in 2014, up from 51% last year,” said Investment Trends Senior Analyst Recep Peker. “This has hindered some platforms more than others and competition is now even more intense at the top end.”

“Planners are expressing greater freedom of platform choice in 2014 and switching away from those who don’t meet their needs. So, despite constrained budgets, platforms are fighting to efficiently provide the best functionality that meets the needs of their users.”

The evidence from 2014 suggests that platforms are succeeding in responding to planners’ needs, which has resulted in planners’ satisfaction with their primary platform breaking the 2013 record, reaching the highest level observed in eleven years.

Our survey research confirms that functionally rich platforms tend to receive higher satisfaction ratings from planners.

Colonial First State FirstWrap continues to lead, closely followed by netwealth and HUB24

Among full-function platforms (those supporting planners advising on a wide range of investments, including direct equities) Colonial First State FirstWrap achieved the number one position in terms of overall functionality for the third year in a row. The five top-ranking full-function platforms were:

1. Colonial First State FirstWrap

2. netwealth

3. HUB24

4. Asgard eWrap

5. MLC Wrap & Navigator

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

“Competition has become very intense at the top end, but Colonial First State FirstWrap managed to retain its position as number one in the industry following another year of significant functionality enhancements,” said Peker.

Recent enhancements introduced by FirstWrap include:

• Ability to set cash exclusions from model portfolio rebalances

• The availability of Separately Managed Account functionality

• Improved education, training and information for both advisers and their clients

• Redesign of the client portal

• Enhanced back-end to facilitate quicker display of data stored on the platform

AMP Flexible Super was the platform making the greatest advances in functionality, including making significant enhancements to both adviser and client mobile and tablet apps, adviser support, smart forms and the ability to create client report templates.

Platforms have focused on portfolio management, usability, client engagement and adviser support

Platforms remain very responsive to planners’ needs and in 2014 have continued to enhance usability, portfolio management tools (including via SMAs), support, reporting, tablet/smartphone functionality and client access.

On the transaction front, netwealth took the awards for “Best Transaction Functionality” and “Best Model Portfolio Functionality” in 2014 following the complete revamp of its model portfolio functionality. Key differentiators include the ability to hold shares listed internationally in model portfolios and floating models, which means clients attached to the model after establishment or rebalance can have the same allocation as all other clients in the model, even if it has deviated from the original allocation.

Adviser support has also been a key area of focus, with many providers furthering the tools, education and collateral made available to advisers. MLC MasterKey has introduced a suite of excellent toolkits, tools and programs to assist advisers with growing their business, while AMP (North and Flexible Super) now runs weekly live webinars to deliver information and education on both platform usage and business support. Advisers can book themselves in to these via a calendar integrated on the platform.

“The philosophy behind adviser support from platforms is evolving rapidly,” said Peker. “Platforms are diversifying from only providing support around platform usage, to providing strategies and helping advisers enhance their businesses.”

In 2014 Investment Trends began formally assessing platforms’ smartphone/tablet functionality, for which HUB24 received the highest score. A key differentiator from other platforms’ is the ability for dealer groups to white label the app and give clients a more personalised experience.