Testing the platform hype against the adviser’s reality

The decline in adviser numbers across the country from a peak in late 2018 has severely exacerbated an under-advice issue that in truth existed even before then. As entry barriers have risen, and in the absence of a significant uptick in the number of new entrants to the profession, advisers are looking for ways to become more productive, and to deliver services to more clients. The use of platforms and associated advicetech has been central to this push.

SuitabilityHub managing director Recep Peker tells Professional Planner a properly implemented platform can be a key determinant of an adviser’s operational efficiency, profitability, and the number of clients they can serve.

Just how effective they are as tools for achieving this will be shown in a first-of-its-kind, industry-wide study currently underway to assess advisers’ use of platforms and how they improve advice business outcomes.

“Each advice firm is different in their value propositions to clients and their business objectives, whether they have a high-touch service model for high-net-worth individuals, or a scalable advice model for mum-and-dad Australians,” Peker says.

“This adviser study will shine the light on advice operating models, allowing you to compare yourself to industry peers based on key practice measures such as how many clients advisers are able to serve versus their ideal number; adviser-to-support staff ratios; key profitability measures, such as revenue per client and cost to serve per client; and the time to complete key advice implementation activities.”

Peker says the study will specifically benchmark these outcomes by platform relationship and the level of use of solutions such as managed accounts. It will also seek feedback from advisers on the future state of their practices and client value propositions to uncover how these can be best supported.

Practical insights from the study will be fed back to platform providers to encourage them to improve their offerings and services to advisers. By mid-June, SuitabilityHub and its research partner on this project, CoreData Research, will prepare a summary report for advisers who take part in the study – which is designed to take about 10 minutes to complete – showing key practice operating metrics at the industry level. The first 500 advisers to complete the study will also receive a $40 gift card.

“We are exploring the practical challenges faced by advisers alongside their business metrics, and overlaying this with the uptake of key features delivered by each platform,” Peker says. “This combined view will help reveal what tools are most effective in supporting different advice models.”

“For example, we will be able to show advisers that focus on serving mass affluent clients at scale benefit the most from using platform features A, B and C; while those wanting to serve a select group of UHNWs [ultra high-net-worths] are able to run more robust businesses when they have access to X, Y and Z.”

Peker says bringing together these insights with advisers’ stated process bottlenecks will provide a clearer picture of what specific features and services the modern adviser needs from a platform to excel.

Implementing a platform inevitably focuses on the supposed or actual benefits to an adviser’s business from improved efficiency and the ability to administer and implement investment decisions across a greater number of clients.

But the other side of that coin is that if a chosen platform doesn’t suit an adviser’s preferred way of working, or if the choice of platform has not been comprehensively reviewed for too long, it can have the opposite effect.

Even if an existing platform is identified as no longer being fit for purpose, implementing a new one can take time.

Peker says that when advisers start using a new platform, they generally place a select number of new clients on the platform to test that it does what it says on the tin, and whether it is the right fit for their business.

“If they find this was an ill-judged decision, they simply stop putting any new clients on it,” he says.

“As their confidence grows, they begin using the platform with a greater share of new clients and eventually start migrating clients off legacy platforms. This migration typically starts once an adviser has been using the platform for three to five years – it’s not often an overnight decision.”

Peker says that if a platform does not work out, “it’s quite easy to stop writing new business on it and begin using another, although fully migrating a book off an existing platform is an onerous task that requires advice and best interest justification”.