Platforms that strive to continuously improve the investment and advice process are out there but haven’t always been easy to find. Until now… writes Dylan Navra, head of product at Morningstar Wealth International.
Could you define what sets a ‘progressive’ platform apart?
There’s likely more than one answer to this conundrum, but here’s our rundown of where we believe the differences lie…
Progressive platforms are not only enablers of advice, but participants in it
Platforms used to administer assets – custody, execution, reporting – but progressive platforms have moved on. Progressive platforms administer and execute advice. Today’s platforms are expected to go beyond buy and sell and provide capability that helps the execution of advice.
Examples of this are the growing number of DFM powered portfolios on platforms and the availability of flexible and hybrid drawdown strategies in pensions. Advisers have strategies they need to execute and are asking if their platforms can help or not.
If not, which platforms can? Progressive platforms have a desire to participate in the advice process and implement the investor outcome, rather than just being involved in instruction and execution.
What to look out for: Platforms that offer tools designed specifically for an advice strategy, such as DFM portfolio management or drawdown.
Progressive platforms don’t inherit change, they drive it
Proprietary platforms – those with in-house technology – are embracing different advice structures and implementing integrations because they can move quickly.
We meet with advice firms regularly to understand their needs and strategies, long before the stage when platforms enter the conversation.
Through this continuous discovery we understand firms’ pain points intimately and can figure out quickly how we can help.
That could be through creating simpler pathways ourselves, or by partnering to deliver the best outcomes for advisers and clients.
What to look out for: The number of integrations platforms have with other providers, such as CRMs. Check the integration is ‘two-way’ and truly digitalised, with no .csv files in sight.
Progressive platforms think about journeys end-to-end
This is an interesting time for platforms. Historically, we’ve been at the end of the conversation – the execution of the advice – but progressive platforms are starting at the end and moving backwards.
We are always asking: where is the next best place we can empower advisers?
Most of the time platforms come alive at the execution stage, but progressive platforms understand that, while the destination matters, the journey does too.
What to look out for: Consider how early in the advice process the platform can help. The earlier, the more progressive.
Progressive platforms can articulate their strategy
Once upon a time a big value of platforms was to offer all types of assets and operate a supermarket-type approach.
It’s important to offer a full sphere of choice today too, but progressive platforms are beginning to align more to advice methodologies, such as adviser-as-platform, CIP-type models, or something else. Naturally, we are all embracing Consumer Duty and focusing on our target customers.
The more focused the target, the more likely we’ll understand their needs and be able to solve their problems. Advisers carrying out platform due diligence should ask: what is the platform’s strategy? Is it a leader in a particular space?
Fewer advisers are selecting on platform reach, more are selecting on how easy it is to execute on the advice strategies they use with clients.
What to look out for: Ask the platform to share its strategy: Is it going after a type of advice, a type of firm, a type of execution? If it is, it may fall into the progressive camp.
Progressive platforms know where to play and how to win
Platforms today are facing into expectations that they’re either good at certain things or they’re not. A platform that doesn’t have certain capabilities but tries to take on all business anyway shoots itself in the foot.
Progressive platforms have honest conversations. They don’t say they can do everything and do it all brilliantly. They say: these are the areas we’re excellent in, these are the areas we’re focused on, and this is our roadmap.
What to look out for: Ask the platform where it considers itself to be strong, where it is looking to improve, and, crucially, which areas it is not planning to focus on. A progressive platform will be able to answer all three.
Progressive platforms are part of the advice ecosystem
An interesting trend emerging amid the talk of integrations from adviser tools into platforms is how platforms are planning to move closer to the facilitation of advice.
Are platforms going to let advice tools facilitate custody and execution and trade vehicles, or are platforms going to provide more tooling and capability around implementing strategies?
People always thought advice moved left to right, starting with the recommendation and then onto the platform to execute. But the platform strategies out there suggest there’s a middling effect occurring. And that’s where the progressive platforms are.
What to look out for: Does the platform offer tools or capabilities that support a particular strategy you are looking to implement?
Progressive platforms do not forget the basics
Progressive platforms remember that getting the basics right remains paramount, and the most important thing a platform can do is provide great, reliable, and speedy service.
One interesting aspect is how platforms are innovating in customer service. How can we help digitise requests, improve levels end-to-end, and promote effective self-service? And is the quality consistent and improving?
Presenting value for money is still a primary objective, thus it’s important to make sure platforms still do the primary role they are asked to do: deliver great service.
What to look out for: What are the areas where platforms are looking to innovate and improve their service?
Financial planning is an ecosystem, and the goal is to open up access and processes for advisers and paraplanners to create their own ecosystem that works in the right way for them, their business and their clients. What each platform must ask itself is whether it wants to be an end point or a participant.
This article was written for International Adviser by Dylan Navra is Head of Product at Morningstar Wealth International.
