Administration and processing errors
are the most common reason behind financial advisers switching platforms, with
platform consolidation and churn on the rise. Research from Investment Trends reveals
that one in five advisers would change platforms if the decision was entirely
up to them. “Platform consolidation and churn are both up at the moment versus
what we’ve seen in recent years,” Mark Johnston, principal at Investment
Trends, told last month’s I&T/Australian Custodial Services Association
Investment Administration conference. “Two years ago the market had solidified,
only 12 per cent wanted to change platforms.
Now, 19 per cent or one in five
say: ‘if it was up to me then I would like to change platform’.” Many planners
are restricted by their dealer group as to what platform they can use. Of those
advisers whose choice of platform is entirely theirs, 28 per cent said they
would change their platform. The Investment Trends October 2008 Planner
Technology Report found the amount of churn among
platform use had increased. In 2008, 31 per cent of advisers stopped using at
least one of the platforms they were putting new client money into, versus only
23 per cent of planners in 2007.
However despite the findings,
Johnston said there was “no inherent drive to
reduce the number of platforms”. On average, planners use three to four
platforms each and put 80 per cent of client dollars through one of them. One
in four advisers use BT or Asgard as their main platform but
Colonial
First
State’s FirstChoice and ING’s
Oneanswer have gained ground. Often what causes advisers to move platforms is
not just the platform itself but how it fits together with other software,
Johnston said.
He said
only one in eight advisers had reduced the number of platforms they use for
integration purposes, with administration and processing errors the biggest
reason behind switching. Poor service and support also rated highly among the
reasons for switching, followed by changing to a “better platform”.
Johnston said 52 per cent
of advisers highlighted “managing data to produce statements of advice” as the
biggest technology and systems challenge facing the business, while 36 per cent
said the biggest challenge was “keeping up to date with technology changes”. Online
client functionality had become a “far more important driver” this year, while
pricing and range of investments had decreased in importance,
Johnston said. “It’s really not about the
range of investments right now, that area is fairly well serviced,”
Johnston said.
