Perhaps like you at the moment, I’m looking for recommendations for some great summer reads to take with me on my holiday.
You may not be surprised to hear that I don’t plan on taking along any of the trade publications or industry papers currently sitting on my desk!
For all the chat about platforms, I wonder if we really have a shared understanding of what a platform actually is. I know there’s a regulatory definition but, in reality, it only scratches the surface.
To some people, a platform is just a piece of technology or a software solution, others see it as simply a way of putting investment products online, while for others, it’s the holy grail for managing and executing their customers’ financial plans.
In a way, platforms are all those things, yet none of those things and it depends on the perspective you’re looking at a platform from.
So in this month’s blog, I thought it would be worthwhile to take a closer look at platforms and see how far they’ve come over the past 15 years.
The standout features of a platform
To my mind, a platform is an online solution for retail financial services that provides a range of investment solutions to meet clients’ needs, within a combination of tax wrappers to help drive better outcomes.
For me, these are the two standout features of a platform. Firstly, the fact that a platform can provide you with access to a wide range of investment solutions, meaning you can pick investments that align with your firm’s investment philosophy and that meet your clients’ needs.
Secondly, the fact that a platform can provide access to those investments within a tax wrapper, meaning the tax implications of the investment growth your clients hope to achieve can be optimised. Both of these features help support your client’s accumulation and decumulation phases and this is where I think the real beauty of a platform lies, in that it’s all online, adds efficiencies to your firm and provides clients with excellent value and easy access to their savings and investments.
Platforms have evolved significantly over the past 15 years
It’s thanks to technology developments that platforms have evolved significantly since they were first launched over 15 years ago and the investment solutions they now offer are much more sophisticated and transparent than they were in the past.
The investment solutions platforms now offer are much more sophisticated and transparent than they were in the past"
Some of the first platforms that appeared on the market were true investment platforms offering an unfettered range of products. Equally, some of the earliest models were, in effect, fund supermarkets, with a limited range of funds.
A number of technology models also exist, with some offering a simple solution while others are supported by a host of systems, resulting in inconsistent investment, income and charging options. A few of these models are still prevalent in the industry today.
Platforms make it clear to the client what they are paying for
A single opaque charging structure was very much a feature of the earliest platforms. Platforms nowadays have unbundled the charges so it’s clear what the client is paying for in terms of their investments, their products, and the advice.
Platforms also deliver outstanding value. At the risk of showing my age, I remember when stakeholder pensions were introduced, and there was concern in the industry about how to respond to a charging cap of 1%. Those levels of charging are now a distant memory with some of the best platforms offering a platform, tax wrapper and quality investment solution for a total cost to the customer of less than 0.5%.
Platforms make best use of data
Platforms have also been great enablers for regulatory change following RDR and, ultimately, help to deliver more efficient outcomes for an adviser firm as well as better outcomes for the client.
A platform can help facilitate what might be three or four quite separate processes into one simple, efficient result. Take the example of a risk questionnaire. If it’s completed on platform, the platform can capture the client data that populates the form, meaning the client account can easily be set up. The data that supplies the client’s attitude to risk can then point you towards a suitable asset allocation for the client’s investment solution.
It also means that once a client’s details have been entered, there’s no need to re-key that information to open different tax wrappers or if the client wants to move into drawdown. In the past, this task would have required a firm to populate separate application forms for each individual transaction, often supplying the same information multiple times. Platforms remove much of this duplication of effort, even where a platform is used on an occasional basis by an adviser and is not fully embedded in the firm.
The data held on platform also helps with ongoing client and regulatory reporting and can deploy consistent investment outcomes more efficiently and accurately as you don’t need to cobble together different bits of data manually.
Great service is at the heart of every good platform proposition
Last but not least, at the heart of every good platform proposition is an outstanding customer service team. I know, from the advisers I speak to, that you really put your faith in the platforms which have great customer service and which go that extra mile when required – for example, by speeding up a payment from an investment to make sure the client can secure that dream home. For me, outstanding customer service is one of the differentiating factors for a modern platform proposition.
Embedding a platform in your business
With the range of benefits and efficiencies platforms can bring to your firm, you may wonder if it’s necessary to embed just one platform in your business.
I would say that if the majority of your clients have similar needs, then embedding one platform could be a good solution. However, if your client base is very diverse, with a variety of needs, then you may want to consider using a platform as and when required. Some firms do use a platform on an occasional basis as an alternative to other investment solutions on the market.
Elevate is an intuitive platform
Elevate lends itself to a lot of the characteristics and features I’ve outlined above. It’s an intuitive platform and I know it’s embedded in many of your firms as the engine for meeting your clients’ needs. There are also some firms I speak to which use Elevate occasionally to meet particular needs and to support their client segmentation.
It’s easy to set up and has a rich array of reporting tools that are simple to use, as well as offering award-winning service. So if you haven’t already given Elevate a try, give it a go. You might even end up embedding it in your business as it’s so easy to use.
And by the way, if you’re looking for a great summer read, the FT has just published its summer books 2019 series so there’s sure to be a few good bets in there.
If you’d like to give Elevate a try, contact us.
The value of investments can go down as well as up and could be worth less than originally invested.
Laws and tax rules may change in the future. The information here is based on our understanding in July 2019. Your own circumstances also have an impact on tax treatment.
The views expressed in this blog should not be regarded as financial advice.