Speaking to financial advisors over many years, it is clear that the role of a financial advisor can be both rewarding and challenging. In an environment where market, socio-economic, technological and political changes can have a direct impact on the daily operations of advisors, they need to stay on their toes to thrive in this high-paced, dynamic industry.
The business propositions of financial advisors and investment platforms have always been tightly intertwined. As the demands of clients on financial advisors have become greater, so too have advisor expectations of what they need from a platform. The days where a platform defined itself by the range of funds available, or by its fee scale, are long gone and, unsurprisingly, these two factors today are well down advisors’ list of priorities when choosing platforms.
A true advice-led platform develops a deep understanding of the advisor practices that it partners with and shapes its proposition accordingly. It is also able to conduct research and development into global industry trends, building products and functionality that help advisors to run better businesses. When a platform invests in these areas, it means that you, as an advisor, don’t have to.
Looking beyond price and product – what are key considerations when choosing a platform?Insight into global trends
The South African advice market often takes its lead from global trends. For example, recent global studies on the intergenerational transfer of wealth have highlighted that 70% of heirs are planning to move away from their parents’ advisor. This presents a serious threat to assets under advice. But advisors who are involved in structuring the inheritance plan stand a much better chance of retaining assets. Placing clients in products that aid the cascade of wealth can also stop beneficiaries from making unwise decisions regarding their inheritance. Partnering with a platform that facilitates the management of intergenerational wealth reduces the risk of the possible loss of assets.
Platform diversification
Splitting assets across platforms for diversification reasons could be costing your clients more due to loss of scale. While client-level pricing goes some way to incentivise clients to use only one platform, it does not help larger family units investing through different legal entities. Ninety One’s recently launched family office development addresses this gap. Our latest enhancement helps advisors bring more of a family’s assets into the advice net while ensuring clients’ fees are cost-effective.
A people’s business
Who are the people from the platform you work with and are they experienced? A blend of experience and talent provides a strong foundation for thought leaders, whose opinion pieces and insights can help you capture the best outcomes for your clients. Stability of the business development team and senior management is the hallmark of a healthy platform business. Not only is this essential for engendering trust, but it is also vital in understanding the ‘road map’ of the provider. Changes in leadership often mean a shift in strategic direction, which can create uncertainty. Stable leadership and a clear long-term plan often go hand in hand: your clients are invested for the long term, and you need to know that the path of the platform is aligned with their long-term needs.
Human resources and staffing
South Africa has seen significant growth in the financial services space, now making up 25% of GDP. Financial advisors are directly impacted by this growth, which can mean more time spent on managing people. Platforms that can improve efficiencies through technology allow you to scale up your business without the need to employ additional staff. Reducing the burden of paper and digitising the investment process should be ingrained in a platform’s DNA. Process automation and straight-through processing translate directly into shorter transaction times, providing a better experience for you and your clients. In this way, a platform’s technology proposition can be seen as an extra member of your staff, available at any time of day you choose to work.
Time versus reward
How much of your time is spent on the review process? A platform offering should provide a suite of tools covering market data analysis and reporting, as well as financial calculators and outcomes modelling. The provider should use its wealth of financial planning expertise and combine it with high-quality data analytics to produce sound investment proposals. Technology can assist with repetitive tasks such as client reviews. Employing the right platform can save your business money and free up time to apply your skills to financial planning where your true value lies.
Compliance is another aspect that can be very time-consuming for a business. For example, advisors are increasingly recognising the value that a platform brings by streamlining the client-onboarding process. Selecting a platform that offers digital risk assessment reduces the need for burdensome paperwork and back-and-forth client correspondence.
Is your platform profitable?
Platforms can be vulnerable to cost pressures. Profit means capital is available for reinvestment to ensure that your chosen platform can continue to improve in all the areas outlined above. Reinvestment of profits in technology can help a platform drive down existing costs, meaning that it can enhance products and functionality without increasing the cost to the client. A platform operating at breakeven or at a loss is less likely to invest money into improvements, so profitability should not to be underestimated.
In conclusion
We have discussed some key areas which may be useful to consider when engaging with your platform provider, to ensure that you are receiving all the benefits that can help you optimise your business.
At Ninety One Investment Platform, we believe that ongoing enhancements to products and functionality, as well as regular engagements with our advisor clients, are crucial to create a sustainable partnership where we both stay ahead of the game.
