That Long Leap

Understanding what advisers need is crucial for platform operators to take advantage of RDR opportunities, argues Fraser Donaldson.
The platform market is currently going through a golden phase, with the assets under administration (AUA) more than doubling between 2010 and March 2012 to over £180 billion. This remarkable rise has been down to the significant advances in platform technology and the approach of the Retail Distribution Review (RDR).
With RDR implementation almost upon us, many advisory businesses are likely to be considering whether and how platform solutions will be able support their post-2012 advice and service proposition and, ultimately, the needs of their clients.
From a platform’s perspective, this is a key window of opportunity to engage with advisory firms. However, operators face an equally challenging period in the run up to January and beyond. There are opportunities in this sector, but how can platform providers differentiate their proposition and effectively communicate this to advisory businesses in order to stand out? At the same time, the consistently high switching rates we have seen among platform users since 2009 serve as a reminder that providers still have work to do around boosting business retention rates.
Our 2012 Platform Report, published in September, revealed the findings of our latest survey among platform users and provides an in-depth review of the market, analysing industry developments and provider movements. The report includes:
•              The results of our platform user satisfaction review, ranking 37 service disciplines across eight distinct categories and revealing which areas of service are meeting user expectations
•              A review of the industry landscape and regulatory landscape, with supporting independent commentary
•              Analysis of the research process and selection criteria advisers use when identifying suitable platform partners and insight into how providers can align their propositions accordingly
•              Trends among the platform user community, including preferred platform provider type, investment outsourcing preferences and frequency of use of investment tools.
The key findings of the survey, highlighted in the report, suggest that advisers see poor flexibility and levels of service as the main reasons for changing their preferred platform provider. Interestingly, advisers didn’t deem the cost of using a platform as important when considering changing platform providers.
One of the biggest concerns we have seen from the advisory sector is whether or not only adopting one platform will jeopardise their independence. While recent FSA papers have clarified this, according to our survey it seems that some advisers remain confused.
From the 345 platform users surveyed, a third thought adopting one platform would jeopardise their independence, while 8% still didn’t know whether or not it would. The one thing which is certain is that the FSA will be scrutinising those advisers who decide to adopt only one platform post-RDR, which means that advisers will need to carry out some very robust due diligence to ensure they can defend their decision.
From our survey, there are three aspects of service that advisers see as the most important:
 
•              Processing timeliness – where applications are processed accurately within an agreed timescale
•              Integrity – where a provider can be relied upon to keep promises and treats advisers and consumers fairly
•              Staff competence – where staff understand and deal with advisers’ problems effectively
 
However, we found that platform providers are falling short of users’ expectations in nine out of the top 10 aspects of service that they regard as most important. As a result, although platforms are increasingly being seen by the adviser community as an indispensable investment administration tool, it is clear that platform operators need to do more to ensure business retention post-2012.
The RDR policy will read across both advised and non-advised platforms, meaning we shall see a more homogenous set of solutions in the market. This will ultimately mean that all platform offerings should become easily adaptable – at least in structural terms.
Platform operators will not want to lose adviser clients to a competitor, as profitability is very hard to achieve in this market. It is crucial they understand and act on the needs of the adviser and their clients. The results of our platform study give a good indication as to how providers are faring in this arena and how they can seek to maximise the opportunities resulting from the RDR.