AMP’s John Keating identifies the top five trends in platforms and discusses how these trends are impacting planners and their clients.

1. Investment choice

Top of the list of major trends currently occurring in the platforms sector is ‘choice’, which is centred around platforms being able to provide the best range of investment solutions for planners and their clients. This includes platforms providing planners with a greater range of managers from which to choose, at competitive price points.

Under the banner of ‘choice’, AMP Head of Platform Development, John Keating also includes the availability of managed portfolios that are professionally run by research teams.

“We have recently launched 12 separately managed portfolios across our platforms that provide even greater choice for planners and their clients,” Keating said. “The products provide planners and their clients with access to a diversified range of managed funds designed to meet specified investment objectives.”

Keating says the portfolios, which come in three investment categories – accumulation, income and objective-based – reflects a wider trend in the industry to provide planners and their clients with investment choice that is delivered seamlessly and efficiently.

“Clients benefit from professional investment management, the ability to track the performance of underlying assets and, importantly, the client owns each of the individual assets in the chosen managed portfolio,” Keating says.

2. Planner efficiency

A continuing trend in the platforms sector is the delivery of greater planner efficiencies, enabling planners to spend more time focusing on client engagement.

Keating pints to AMP’s recent release of its managed portfolios as a good example of a platform enhancing its offering to provide greater efficiency for its users.

“For planners, we see the benefits around access to professional investment management. Through the ongoing and professional management of those portfolios, it provides greater overall efficiency for planners, enabling them to spend more time engaging with their clients around their goals and objectives.”

Platforms are also focusing on addressing compliance and risk management issues for planners, while reporting tools are also becoming a mainstay of platform functionality, including tools that provide planners with a quick snapshot of their clients’ holdings.

“These tools are providing planners with the ability to quickly see what the state of play is in terms of their platform business, funds under administration, their clients’ product holdings, value, fee revenue and so forth,” Keating says.

The third tenet of adviser efficiency identified is the continued integration of the advice process on platforms.

“For example, how do you take what comes out of the advice process and advice documents, and push that into a new business application or transaction on platform? This type of functionality will really save time for planners and their staff in terms of re-keying information,” Keating says.

Investment Trends senior analyst, King Loong Choi agrees, saying transactional efficiency continues to be a key focus for investment platforms, with platforms making headway on two main fronts – managed accounts and the ability to generate Records of Advice (ROAs) on platform.

“For years, financial planners have sought to achieve greater administration and transactional efficiencies in their practice, and in recent times, many have embraced managed accounts as a solution,” says Choi. “Many platform providers have responded by broadening the accessibility and functionality of managed accounts to their users.”

The Investment Trends 2017 Platform Benchmarking & Competitive Analysis Report found that the main improvements related to a wider range of managed account structures, models and managers being made available, improvements to model manager portals, and an easier in-specie transfer process.

“In addition, platforms like HUB24, Netwealth and OneVue have recently introduced the ability for planners to generate ROAs on platform, creating even greater efficiencies in the advice delivery process,” Choi says.

“In fact, Investment Trends’ latest Planner Technology Report shows that planners want the next generation of platforms to play a greater role in advice delivery, and many leading platforms have risen to this challenge.”

3. Control and flexibility

According to Keating, control and flexibility on platforms is about enabling planners to manage their advice strategies in the way they want to. As an example, Keating refers to the model portfolio functionality AMP has on its platform that provides access to bulk trading, and allows planners to manage their own models, or the models they choose to use, across their client base.

And under this trend of control and flexibility, there is also a strong emphasis from platform providers to support the wide variety of planner business models operating in the marketplace.

“This is quite relevant where a practice might be operating under a Managed Discretionary Account type structure,” Keating says. “And where planners are providing bespoke client solutions, platforms need to be able to support that as well.”

4. Client experience

Key to enhancing the client experience with platforms is the use of complementary ‘digital’ offerings, with three key trends emerging in relation to this. They are:

• allowing clients easy and timely access to their portfolio information;
• platforms providing users with choice on how they access that information, whether that’s via the web, tablet or smartphone; and
• the need for platforms to link the information and insights they are sharing with users, back to their individual goals that their planner is helping them to achieve.

“Moving forward, I believe enhancing the overall client experience, particularly via digital offerings, is going to be critical for platforms,” Keating says.

5. Scale

From a platform provider’s perspective, the fifth trend identified playing out in the platform space is the importance of scale, capital strength and strong governance.

And as technology continues to rapidly evolve, the importance of capital investment by platform providers, in terms of innovation and development to stay ahead of the technology wave, is critically important.

Keating believes that platform providers that have access to capital and complementary resources within the business, like access to business analytics, which are overlaid with strong governance practices and processes, are best placed for continued growth.

“Planners, their clients and the regulators demand rigorous governance standards, so strong governance practices and constructive relationships with the regulators will continue to be essential as platforms continue to evolve,” he says.

An ever-evolving landscape

So, how will the platform sector evolve over the next 5-10 years?

Planner efficiency

Keating believes platforms will continue to remain highly relevant in the financial services sector, as platforms seek to deliver greater operating efficiencies for planners. This includes deep integration of advice processes and the advice experience, which will continue to figure largely in the evolutionary path of platforms.

“I expect platforms to remain an essential wealth management tool for planners and their clients,” he says. “It’s all about providing investment choice and flexibility. And also, continuing to deliver the basics well and at scale, like investment administration, record-keeping and efficient methods of managing investment portfolios.”

Technology and cyber fraud

Secondly, in terms of the evolution of platforms, the key theme here centres around technology and the pace of change happening within the sector.

“Platforms are not immune from technology-driven disruption. We have to stay ahead of that technology wave,” Keating says.

Some good examples of what the platform sector is already doing to respond to the challenges of technology disruption are the use of robotics and algorithmic intelligence, and the testing of chat bots in platform businesses.

However, Choi acknowledges that planners are increasingly concerned about the threat coming from cyber fraud and the risks this poses to platforms.

According to Investment Trends research, one-quarter of planners are aware of fellow planners who have received fraudulent client withdrawal requests in the last three years. However, Choi says many platforms are responding to this growing risk and have taken steps to boost their cyber security.

“Fraudulent client withdrawal requests is a key area where platforms have focused their cyber security efforts,” Choi says. “While nearly all platforms currently send alerts to clients when a withdrawal request is made, or when their bank account details are updated, some platforms have taken security to the next level with client validation of withdrawal requests.”

Choi adds that the option for client validation of withdrawals is highly sought after, with three in five planners seeking this feature from their platforms.

Platform consolidation

Keating predicts further consolidation of the platforms sector, with the issues of scale, operating cost efficiency and regulation all remaining high on the agenda.

“So, we are going to see platform providers moving faster around consolidation and simplifying their offerings to drive those scale and efficiency benefits,” Keating says.

“But I remain of the view there will be fewer platforms available in the years ahead, and those that will be successful, will be the ones that are able to integrate well with the advice process and have strong distribution.

“It’s my view that the platform providers that have a deep understanding of the advice process, the regulatory landscape, and are nimble with technology to support planners, are the platforms that will ultimately be successful in this ever-evolving landscape.”