STP: straight to printer or real efficiency?

Even the most technology savvy financial planners are inclined to switch off when the discussion turns to straight-through processing (STP). But that could soon change.

Technology provider IWL claims a new piece of software piloted in Credit Suisse Asset Management’s recently launched platform, MasterWrap, will change the perception of STP and revolutionise the master trust and wrap market for advisers.

IWL’s VisiTrustedNetwork (VTN) is aiming to provide financial planners with a single automated download point from multiple platforms, according to IWL Financial Advisory Solutions general manager Ross Johnston.

VTN has been created to combine IWL’s VisiPlan front-end software with a range of back-office software systems to deliver STP to advisers who use platforms. It allows them to order funds from platforms online from the portfolio management module of VisiPlan, with client information automatically updated when orders are fulfilled.

Many planners currently rely on either downloading data files from a platform provider’s web site, or having the files e-mailed to them — an often laborious process.

According to Johnston, by moving to an STP model, technology can help drive down industry costs by increasing efficiency.

“This can be done by vertical integration where the financial planner’s front-end is connected to the back-end of platforms,” Johnston says.

It is a view shared by Richard Gilbert, chief executive of the Investment and Financial Services Association (IFSA). He says technology is one of the key areas master funds and wraps can gain leverage at a time when there is fierce price competition in the platform market.

According to Gilbert, those groups that don’t remain cutting edge in terms of reaping efficiency gains from technology will struggle to price competitively and are likely to become merger and acquisition targets.

“There is intense competition out there between the platforms, and one way to bring down costs and later prices is to have a more efficient interaction between the back and front-offices,” Gilbert says.

But platforms and the advisers who use them have a long way to go, Gilbert says.

“There’s some confusion about STP and whether that actually means straight to printer. Some groups claim to offer STP, but when it comes to the final transaction into the fund there’s a two or three day turnaround.

“Generally there aren’t many providers that have a seamless transition from payer to receiver, and invariably somewhere along the way paper will be involved.”