Multiple choice for advisers

According to one researcher, every Australian financial planner uses about 2.5 platforms in their practice.

Platforms were originally set up to provide the back-office support for the planner, but as suppliers compete with each other to sign up more clients, dealer groups end up with multiple platforms on their approved lists.

IOOF Retail Funds Management head of product Andrew Polson says planners want different types of platforms and no one wrap is the perfect solution.

“Sometimes they don’t want all the services and favour a cut-down version,” he says.

“A lot of legacy agreements in dealer groups also means they have more than one platform.”

Aviva Australia group director products Rob Donaghy says a lot of advisers want to be perceived as independent and that is reflected in the use of their platform.

“The use of multiple platforms does create problems of scale for some providers,” he says.

Skandia head of investments Will Burkett says the development of aggregated reporting of multiple platforms through the planning software does reduce the need to rationalise platforms in a dealer group. Players in this area include Coin and Xplan.

“This aggregation will lead to the blurring of platforms and means the consolidation will be slow,” he says.

Polson says the number of platforms in dealer groups is starting to come down and conflict of interest will also bring down the numbers if clients can be migrated.

“Some of the legacy platforms are expensive and it is of benefit to the client to migrate them,” he says.

“It is a challenge for the industry to migrate clients and software differences don’t help.

“But it is getting easier to link platforms and although the links are expensive, prices will come down.”

However, some believe that multiple platforms in a practice can affect the price of the business when it comes time to sell.

But, MB & Associates director Mark Birrell, disagrees.

“If the buying party is on platform A and the selling party is on the same, then it doesn’t affect the value, as scale creates greater economic value.”

Birrell says it would only affect the value if the two platforms were completely incompatible.

When changing dealer groups, this is another factor in creating multiple use.

“It is not very efficient with more than three platforms, but one platform will not do all jobs,” Birrell says.