Platform providers look for a target segment but functionality often suits all

While platforms seek to differentiate themselves across market segments, findings from Investment Trends show there is little to separate them across those channels.

The researcher released its ‘2023 Platform Competitive Analysis and Benchmarking Report’ last week, which found HUB24 and Netwealth continued to lead the way for preferred platform providers.

But this year the report included benchmarking across three client segments: mass market, mass affluent and high net worth (HNW).

Investment Trends finance and research director Paul McGivern says while platforms target certain markets, the functionality of many of the market leaders lends itself to servicing at least one other if not both segments well.

“It was an interesting finding – we did think there would be a bigger difference but it turns out there’s not,” McGivern tells Professional Planner.

Mass Market (defined with client balances below $150,000) most valued functionality was decision support tools like investment valuations, research, calculators and modelling, tax tools, design and distribution obligations, and education.

Mass affluent (balances between $150,000 and $500,000) valued transaction tools like unlisted investments, cash, equities, insurance, managed accounts, and model portfolios.

HNW (balances over $500,000) most valued managed funds, cash and term deposits, unlisted investments, managed accounts and tailored model portfolios.

The survey included 35 per cent of advisers who identified as focussed on the HNW segment, 44 per cent covering mass affluent and 21 per cent serving mass market clients.

While Netwealth just edges over HUB24 in the HNW market, McGivern says, the functionality of both is highly effective across all three client segments.

“An interesting thing we found looking at it [is] the sophistication of the platform’s capabilities really applies right across the board,” McGivern says.

“It doesn’t matter if you’re a mass market adviser or a high-net-worth adviser, if you’re a HUB24 or Netwealth user all that functionality is very valid for all three segments. That’s been an interesting finding in itself, at the sophisticated end, there isn’t a lot of differentiation for the offer for the three different types of advisers.”

While some were functional across multiple segments, McGivern says CFS FirstChoice had a stronger offering for mass market clients, while Macquarie Wrap best served the mass affluent segment.

“The one who has the most differentiated offer between the three adviser segments is FirstChoice, they’ve definitely got an identifiable tilt towards the mass market,” McGivern says.

AMP North, which has targeted independent financial advisers to expand its funds under management, was equal between mass affluent and HNW, although McGivern notes AMP will market it towards the mass affluent segment.

“Even though they say that their advisers are targeting the mass affluent space, on the work that we did, the capabilities of the platform were just as good for high net worth as opposed to mass affluent,” McGivern says.

He compares it to Formula One racing technology, where leap forwards in technology start at the highest level in racing before showing up in simpler forms down the track.

Praemium, which had since acquired the troubled OneVue platform business from Iress since the report’s findings were published, served all three segments well despite being geared for HNW.

“I don’t think it’s deliberate by them, it just so happens that the functionality that they’ve developed is equally sought after by the three different segments of advisers,” McGivern says.

“Mason Stevens is one where they’ve probably got stronger functionality for the mass affluent and high net worth and then it’s a little less applicable for mass market.”