Different value propositions mean advisers will use multiple platforms for different needs, but the lack of standardisation threatens efficiency according to research from Investment Trends.
The 2022 Adviser Technology Report found the use of multiple platforms has reached a 10-year record high average of three, but advisers have increased the proportion of new business directed to their secondary platform at the expense of their main platform.
Investment Trends research director Dougal Guild tells Professional Planner advisers have been willing to consider multiple platforms for a long time now and this is unlikely to change.
“Because advisers have clients with different needs, there are different product solutions that are potentially appropriate more individual clients.”
Guild noted change in the industry dynamic with bank-owned wealth management arms moving, leading to new ownership models.
“The platforms space is a hotly contested, fiercely competitive space,” Guild says.
Because platforms don’t have a one size fits all approach, advisers ultimately use different platforms for different needs, Guild says.
“We’re also seeing a change in the dynamic around the number of financial advisers in the market; they’re reducing, so client books are being moved around. That means different practices are ending up with multiple platforms and are in a good position to evaluate the different platform offers that are available.”
Guild noted the current dynamic is viewed through the lens of platforms viewing the adviser base as their single market, whereas current advice business models can’t rely on a single platform.
“Therefore, they will always be in a position where they are potentially are going to be using multiple platforms,” Guild says. “Until the investment offers, features, fees and capabilities become so broad and so consistent, advisers will always be having a different need for different clients and using multiple platforms.”
Talk to each other
Another key finding of the research is the use of multiple platforms meant platform integration with planning software is also increasingly important.
Guild says platforms need to work on improving efficiency for advisers.
“Advisers are having to use multiple technology solutions in their ongoing interactions with their clients. That includes a combination of advice preparation and delivery software solutions, as well as investment platforms where they’re executing advice.”
Industry standardisation is also a significant area of need, with fee consent and DDO being major issues for advisers.
“Because there is a lack of broader industry standardization, there’s no consistent templates,” Guild says. “Multiple providers are providing multiple different solutions to that same individual adviser. Advisers have four or five different providers, giving them a particular template or process to do fee consent. That’s just because of this lack of standardised tool set requirement.”
Sharing the burden
The research found advisers face significant delays regarding implementation of their advice and two-thirds stated they would use an end-to-end solution to minimise the delays and errors currently occurring between advice delivery and implementation.
Somewhat optimistically, advisers believe planning software providers are best placed to be able to deliver this solution.
The study found advice practices are currently expected to increase their technology spend from $146,000 to $216,000 a year.
Advisers believe they could use software to help them with their greatest issues; compliance burden (65 per cent), the ability to provide affordable advice (41 per cent), and regulatory change (40 per cent) are cited as the main challenges for advice businesses.
“What comes up year on year is the compliance burden is top of the list for [adviser] challenges,” Guild says. “Ongoing regulatory change follows very closely behind that.”
Guild says all three issues cited are connected. “The combination of those two things [compliance burden and regulator change] means the cost to deliver advice is increasing and the ability to provide affordable advice then rounds out the top three challenges for advice practices.”
