All the right tools

Alan Kenny

Centric Wealthrecently surveyed its advisers on their top critierion for choosing a platform. The unanimous answer was efficiency.

“We went through a detailed process of surveying each adviser and efficiency was the number one requirement on the list,” Centric Wealth manager best practice and administration systems Jennifer McDermott said.

The dealer group uses 12 platforms, which stems from the practice of advisers bringing platforms with them when they join.

“We can’t run efficiently with such a large number of platforms,” she said.

Some of the platforms the dealer group uses are legacy systems — such as the Invia Platform developed by Goldman Sachs — that have attracted very few other users.

The aim is to rationalise this list down to one main platform with possibly a couple of other options.

“We have found some platforms are more efficient than others,” she said.

“The platforms with the higher levels of interfacing are better at efficiency especially when looking at the progress of transactions.”

McDermott said despite higher levels of electronic transactions, paperwork still gets lost, which takes the edge off efficiency claims by the platform operators.

“Clients also have a different understanding of what the technology can deliver for them and believe the platform could deliver a better service,” she said.

“However, usually once the account is established with a platform, the normal operations are efficient.”

McDermott said the surveyed advisers wanted to see reports become more reliable. She admits platforms have progressed from when the adviser had to compile various components of the report into a comprehensive document for the client.

“Today the adviser can take the report and deliver it straight to the client.”

She said advisers accept things go wrong, but they want mistakes to be corrected quickly and hassle free.

Centric Wealth has created a list of critical service levels, such as efficiency and reliable reporting, as the basis for choosing a platform.

“We want the platform to be for administration and not do anything else,” she said.

“We don’t want financial planning software modules; we just want access to managed investments and listed securities.”

Centric Wealth has clients with different equity holdings and it wants to roll those into the one platform.

Listed securities on the platform with tools to manage those portfolios will be a crucial deciding factor on selecting a platform, she said.

Aviva general manager wealth and products Andrew Barker said the number one factor in achieving platform efficiency was the transaction capability of the system.

“We are seen as being close to the top of the table in efficiency and this is reflected in the take up of N-link, which is designed to improve efficiency for the planner,” he said.

“The driver is straight through processing. However, there are still circumstances when the adviser chooses not to use N-Link.”

However, Barker said straight through processing has to be transparent so the adviser can track the transaction at any stage.

ColonialFirstState general manger product and investment services Alan Kenny said when FirstChoice was launched in 2002, the ‘baby wrap’ bought simple trading processes to the market.

“We introduced trade today/confirm tomorrow process,” he said.

“This service has become the benchmark for platforms.

“If you don’t have 24-hour processing and the adviser has to chase you up, then that doesn’t save time for the adviser.”

Kenny said this is the basic rule of running an efficient platform.

“This is why 50 per cent of independent advisers are using FirstChoice,” he said.

Macquarie Adviser Solutions head of product and technology Tony Graham said delivering efficiencies to the adviser stems back to integration of the front end and the platform.

“The platform provider has to understand the adviser’s requirements and what segments they operate in,” he said.

Some advisers are so focused on efficiencies they won’t accept any clients that don’t fit the platform they are using.”

Graham said this is why the front and back-ends have to work together — and technology can make that happen.

“If the adviser has to re-key information at any point, then they are not going to get the efficiencies and I accept this is the number one issue for advisers,” he said.

“The rationalisation of platforms will eventually happen because those platforms that don’t deliver the efficiencies will be dropped by the advisers.”

Platform providers need fund flows through the platform to earn the revenue to pay for the technology. Graham suggests $10 billion of funds under advice in a platform is now the minimum for operators to be able to afford the technology to achieve operating efficiencies.

The technology spend has to continue as advisers want more features and services.

Graham said adding equity reporting systems is an example of the platforms being the service for advisers who now deal in direct equities.

“To survive in the platform market you have got to offer the range of services if you want to attract advisers to your platform,” he said.

“And you still have to come up with the options, even if not every adviser is going to use them.”

Netwealth managing director Michael Heine said advisers want their platforms to do everything and do it better.

“The more electronic interfacing you have, the better the efficiencies,” he said.

“The more efficient platforms systems have less human intervention.”

However, Heine accepts there still has to be some human intervention, but by keeping it simple, the platform provider can improve the physical administration.

“There will certainly be more integration of products, such as margin lending and insurance, and some platform providers will integrate the planning software,” he said.

“But I think advisers will resist that as they don’t want to be stuck with one solution does all.”

But MLC general manager superannuation and investments Anthony Waldron disagrees and believes this will be crucial to deliver the efficiency on platforms that advisers want.

“The next step is to really integrate the planning software with the back office and we are introducing a number of steps to achieve this,” he said.

“One of the first steps to achieve this will be the move to no signatures required for investments going into MasterKey. We believe this will really lift efficiency and save time for the adviser.”

Waldron said mailing completed forms for investments was the most intrusive aspect because of the time it takes to process a client’s investment intentions.

“We will be confirming investments in a couple of days rather than the 10 days it takes at present,” he said.

“It will also link into the financial planning software.”

However, despite all the options and products that are added to platforms each month, some things will never be incorporated.

ING head of product and strategy personal investment David Kan said while platform providers were continuing to add products and services, certain things will never be suitable for this form of distribution.

“Platforms could never handle products such as close-ended funds or managed investment schemes due to their structures,” he said.

“But we will see the vast bulk of investment products on platforms, which bring benefits to the advisers.”

Kan said a comprehensive array of products and services will deliver efficiencies in running the back office for advisers.

“There are efficiencies for the investor as well as the adviser and these efficiencies continue to improve,” he said.

“This is the reflected in servicing the client and prices so there are benefits for both parties.”

Kan said straight through processing was still running into some opposition, but as the take-up of these systems grows, this resistance will diminish.

“The moment you have people keying in information, there is more room for error and if you can eliminate that, then greater platform efficiency will be achieved,” he said.