Some advisers are getting nowhere near what they expect from their chosen platform.
Variations of ‘I just want something that works’ are not uncommon, alongside complaints about being unable to speak to someone over the phone, unreasonable delays or an over-reliance on manual processes in the digital age.
These frustrating issues existed even before Covid-19, but advisers say the problems have worsened since the pandemic.
“The typical turnaround of amending a client’s holdings appears to have slumped, and it seems an escalating number of working days are needed to respond to any queries,” says Kingswood chartered financial planner Ryan Smith.
“Adding more onus on the back-office team to chase requested information takes resources away from helping to create a good client experience.”
If a drop in service impacts on the client, it’s an easy decision to move
Pressure from the regulator to provide greater transparency, consistency and value for money for consumers of financial services has contributed to advice firms’ increasing reliance on technology — often via platforms — to achieve efficiencies in their business.
According to NextWealth’s eSignature & Document Submission Report 2022, 72% of advisers want a fully digital set of processes from their platform.
However, an average of 19% of processes still require a paper form, either posted or scanned, with some providers requiring this for more than 40% of processes.
The gap between what advisers expect from a platform and what they get throws up questions about what a modern platform should look like and why this is difficult to deliver. In short, are today’s platforms up to the job?
Spotlight on service
Poor customer service is one of advisers’ biggest bugbears about platforms. Such service is often discovered only when advisers need help to resolve problems.
Lower-cost platforms, in particular, seem to be struggling to balance digitisation — which keeps costs down — with the human intervention advisers expect when something goes wrong on the digital side.
If I was choosing a platform I would look at whether it was investing in a digital capability
In April, Money Marketing reported many advisers who used the Embark platform were recommending clients move away from it because service levels had deteriorated. Four months on, this is still the case.
One adviser, who is gradually moving clients from Embark to Aegon, tells Money Marketing, in their experience, platforms that are “as cheap as chips” do not work.
“They try to cut costs to have a platform that is a facilitator and they put all the work on the adviser.
“They do not provide support to clients, so the adviser has got to do that as well.”
The adviser says a client who had forgotten their Embark password and entered the wrong one three times in a row got locked out of their account over a weekend. Requesting a temporary password failed, so the client had to wait until Monday morning for the adviser to perform a manual reset.
A lot of platforms can’t control their technology. They are too dependent on their partners
As Embark’s website shows, the customer service team is contactable only during normal business hours. But many clients catch up with their financial planning at weekends and will be irritated if they cannot do so in the so-called digital age.
“Why would someone build a platform, or any web-interfacing site, in the modern world that requires human intervention in the fairly simple and often-used task of resetting the password?” asks the adviser.
Embark says clients can reset their password on its website, but advisers must unlock accounts where clients have failed to enter the correct password three times. Although this is frustrating for advisers, Embark says the process exists to protect clients.
How many firms really have the appetite to bear the brunt of the regulatory, tech maintenance, admin, service and capital strain of running a platform?
“We can confirm this is for security reasons. Set-ups like these, for fraud and security purposes, are not uncommon,” says an Embark spokesperson.
The adviser acknowledges that Lloyds — Embark’s new owner — is trying to improve the platform’s dealings with advisers.
“I recently got a call from someone saying, ‘I’m your new business development manager.’ I said, ‘Oh, really? I’ve never had one of those before.’
“Lloyds was quite taken aback that nobody speaks to advisers, but I said, ‘It’s too late now. I’m moving.’”
Make or break
Commentators think, because platform providers know how challenging it is for advisers to switch clients out of existing platform arrangements, complacency can set in.
However, there is a feeling the forthcoming Consumer Duty will shake things up.
Platforms, like advisers, will have to put themselves in their customers’ shoes and “must act to deliver good outcomes for the retail consumers of [their] products”, as required by the Financial Conduct Authority.
If you look at the things a platform does, all the stuff delivering value to clients comes from the technology. There is very little value delivered to clients by the platform
“No platform that is serious about service should ever have advisers wasting their time stuck in call queues rather than spending time with their client,” says 7IM managing director, intermediary, Verona Kenny.
“We’re going to see service more and more in the headlines as it becomes a make-or-break criterion in platform due diligence.”
The Consumer Duty is expected to prompt platforms to clarify the service standards they aspire to.
“It is about improving outcomes for consumers, so platforms will be looking at what is a reasonable level of customer service,” says The Lang Cat consulting director Mike Barrett.
“Unnecessary delays in transfers and being put on hold over the phone would come under what providers view as unreasonable.
“Platforms will need to be clear around the levels of service they will deliver at weekends, and that kind of stuff.”
I’d argue investing in technology can help platforms attract the top engineering talent outside financial services
Barrett believes the Consumer Duty means advisers too will have to manage this issue to meet their clients’ expectations.
“So, if clients are going to log on regularly at weekends, make sure you’re with a provider that facilitates that,” he says.
Data from Platforum’s March 2022 ‘UK Adviser Platforms Market Overview’ confirms advisers’ biggest concern about platforms is service. While 13% of respondents were ‘not at all concerned’ about platform service levels, 28% were ‘moderately concerned’ and 29% ‘extremely concerned’. The report also puts Embark at the bottom of Platforum’s User Leaderboard rankings, with Hubwise just above.
Too many hoops
Like those who use Embark, Hubwise users are starting to run out of patience and move elsewhere. One told Money Marketing there were too many hoops to jump through, so making a small withdrawal for a client took four weeks.
“I cannot cope with the inefficiencies, and it is difficult to speak to anybody to resolve issues,” the adviser said.
The problem platforms have is there is no single client need — they may have 50 micro-audiences with different nuances and requirements
A spokesperson for SS&C, which owns Hubwise, says: “SS&C Hubwise handles customer queries digitally, a process we developed based on customer demand. This approach is explained to customers during the sales process and training, and overall feedback has been positive.”
They added Hubwise was working to further enhance its resources and support for customers.
Switching platform involves both a lot of work for advisers and disruption for clients, so advisers tend to do it only as a last resort.
“We have found a drop in adviser support doesn’t tend to be enough to prompt advisers to move platform. They will use platforms they are frustrated with for years on the basis that it’s difficult to justify switching,” says Platforum research director Richard Bradley.
Platforms will need to be clear around the levels of service they will deliver at weekends
“But, if a drop in service leads to something that impacts on the client, and it fails noticeably for clients, it’s an easy decision for advisers to move.”
Advisers tend to agree.
Finn Houlihan, managing director at Arlo Group and ATC Tax, says: “It’s a big decision for a business to go with a platform. It’s annoying for advisers if another platform pops up that is far better than the one they’ve got now as it’s another big project on the horizon.”
As well as Nucleus, Houlihan uses Novia, which is among those platforms NextWealth has identified as lagging in terms of digital processes. Houlihan knows other platforms may be better in this respect, but it is not a big enough issue for him to justify switching.
“We have a good relationship with Novia. We’ve not had any major issues and I like its online platform,” he says.
“But we always have our ear to the ground. If there’s something a platform has got to improve on that is detrimental to the client, as an adviser you will take action.”
Platforms have had a good run for their money but in the long run what they need to do — and it is challenging — is offer things to advisers to make them more competitive
Novia acknowledges NextWealth has identified its weakness. However, it says, having being bought by private equity firm AnaCap last year, there is significant funding available to invest heavily in the proposition.
The platform is currently upping its game through microservices, which will enable Novia to upgrade and adapt to the changing needs of users in a similar way to Apple’s app store.
Novia chief commercial officer Barry Neilson says, historically, platforms have either developed their own technology — built on a single system — or outsourced to third parties such as Bravura, FNZ or GBST.
“Both models have proven to be sub-optimal. They don’t necessarily give the platform the right degree of control or the ability to respond to the changing needs of the user,” he says.
Advisers often say platforms need to do the basics right. But when you dig deeper there is a lot of functionality included in that
“Both models pivot around a single monolithic codebase, which is one bit of kit with thousands of lines of code. But over time it gets rusty and making changes becomes harder.
“It’s an unwieldy way to run a system.”
Neilson adds: “In contrast, microservices are individual lines of code for a set task that are plugged in like apps, rather than built into the base system. Platforms can add or replace them easily.
“We’ve got five microservices in place, and we control our investor and adviser portals. We have a lot of control for advisers, but a lot of platforms can’t control their technology. They are too dependent on their partners.”
Increasing demands
When the platform market was in its infancy over 20 years ago, managing and administering investments in one place was its big USP. The first wave of fund supermarkets and wrap platforms catered for adviser needs that were more homogenous than they are today, which arguably made things simpler.
However, even in the early days one platform did not do everything advisers wanted. Research in 2004 from Ample — a platform later absorbed into Interactive Investor, now part of Abrdn — found some advisers were using a particular platform for the tools it offered, and using another for transactions.
The research also found advisers wanted better integration with their back-office systems.
If clients are going to log on regularly at weekends, make sure you’re with a provider that facilitates that
Technology has moved on, but integration is still an issue for modern platforms with various bits of tech of their own.
“The problem platforms have is there is no single client need — they may have 50 micro-audiences with different nuances and requirements,” says Neilson.
“And, if they have an antiquated single-system codebase, they will struggle to implement change.”
As adviser platforms have evolved, they have delivered more. But the frustration advisers feel at what a platform cannot do can overshadow what it is getting right.
“Advisers often say platforms need to do the basics right,” says Platforum’s Bradley.
“But when you dig deeper there is a lot of functionality included in that.”
Advisers may also expect platforms to deliver in areas they are not fully up to speed on themselves. NextWealth’s research found, despite almost three-quarters of advisers surveyed calling for fully digitised platforms, only 56% were using e-signatures.
Unnecessary delays in transfers and being put on hold over the phone would come under what providers view as unreasonable
“To get platforms to invest in e-signatures, they need to be used by advisers and their clients,” says NextWealth managing director Heather Hopkins.
“But if I was choosing a platform I would look at whether it was investing in a digital capability because, even if there are things advisers are not using now, they will want them there for future financial planning.”
Significant cost
There appears to be little sympathy for platforms, which have had to be all things to all advisers. Older platforms that have got by for years by propping up creaking systems have eventually needed to undergo the dreaded ‘replatforming’ process at a significant cost.
Quilter’s replatforming project took around seven years to complete and was fraught with problems, including delays and a change of technology provider. Last year, Money Marketing reported the total cost was likely to be over £500m since Skandia — the platform’s previous incarnation — had started the project in 2013.
According to Quilter commercial and propositions director David Tiller, modern platforms are all about integration.
“The more you put on a platform to be useful, the more bits that need to be connected to a lot of other technology, and that’s one of the challenges,” he says.
“Earlier platforms evolved and built bits on, Frankenstein-like. They had to keep progressing, which is why they ended up with a big replatforming event.”
We’re going to see service more and more in the headlines as it becomes a make-or-break criterion in platform due diligence
Tiller thinks the only way to avoid replatforming is to invest heavily in technology on a regular basis.
“Leaders in the platform market have to do this. If they slip behind, it is difficult to catch up,” he says.
As one of the newer ‘digital first’ platforms, Fundment has a different take on the technology problems. Its chief executive, Ola Abdul, points out that, as platforms have not adopted technology at the same speed and level as other industries have — even other areas of financial services, like banking — they have found it difficult to compete for the best IT talent.
“Some of these people are industry agnostic,” says Abdul.
“I’d argue investing in technology can help platforms attract the top engineering talent outside financial services. If there was the option to build some cool stuff — products that helped with climate change, for example — you could attract quality engineers, to deal with that rather than work in a bank.”
Adding more onus on the back-office team to chase requested information takes resources away from helping to create a good client experience
For some commentators, the only way for platforms to be fit for purpose is to adapt and change.
Financial Technology Research Centre director Ian McKenna says: “If you look at the things a platform does — consolidate and aggregate trades, deal with CASS rules [Client Assets Sourcebook rules that guide and regulate FCA-registered firms that hold or control client money or assets] and provide service to advisers — all the stuff delivering value to clients comes from the technology. There is very little value delivered to clients by the platform.”
McKenna predicts blockchain — technology that enables data from multiple sources to be easily collected, integrated and shared — will ‘kill platforms’.
“Once the asset management industry starts moving its registration process over to blockchain, it will take so much value away from platforms because it gives so much transparency,” he says.
Lloyds was quite taken aback that nobody speaks to advisers, but I said, ‘It’s too late now. I’m moving’
McKenna’s key message is that platforms need to adapt to find alternative ways to add value because other tech firms can deliver what platforms currently provide but at a cheaper cost.
“Platforms have had a good run for their money but in the long run what they need to do — and it is challenging — is offer things to advisers to make them more competitive,” he says. “But they can’t do it in a subsidised way as that would be a breach of the indirect benefit and inducement rules. They have to achieve commercial rates.”
As an example, McKenna points to Fidelity International’s partnership with Canadian financial planning software firm Conquest, which was announced in May. Conquest’s financial planning software, Conquest Planning, uses data and artificial intelligence to help advisers with the financial planning process.
Advisers will use platforms they are frustrated with for years on the basis that it’s difficult to justify switching
“Fidelity has seen the need for something different and has invested in the Conquest platform. It now has the distribution rights to the software in the UK for the advice market,” says McKenna.
Polarisation
Many commentators regard the platform sector as on the brink of a third wave of development. This could involve polarisation between those at the cutting edge of digitisation and the rest of the market.
Platforms that are as cheap as chips do not work. They do not provide support to clients, so the adviser has got to do that as well
Some firms, like Seccl, will focus on providing the technology to enable advice firms to build their own platform. But there are question marks around the feasibility of this model for smaller advice firms in particular, despite the perceived appeal of having greater control and flexibility.
“While the technology is largely there, you have to ask yourself, ‘How many firms really have the appetite to bear the brunt of the regulatory, tech maintenance, admin, service and capital strain of running a platform?’” says Kenny at 7IM.
She says many advice firms look to run their own platform but then back away, and 7IM thinks this is a trend that is set to continue.
“Becoming a technology provider as well as a financial planner is quite the juggling act.
“The firms we speak to are clear they want to solely focus on financial planning,” says Kenny.
I cannot cope with the inefficiencies. And it is difficult to speak to anybody
Seccl chief executive and former Nucleus founder David Ferguson accepts not all advisers either do or will want the extra responsibilities that come with building an in-house platform. In his view, those who do not can expect to see a new wave of platforms emerge to cater for their needs.
“Over time, some of the back-office systems or discretionary fund managers will become platforms in their own right, possibly through the open API [application programming interface] model that Seccl and others offer,” says Ferguson.
APIs provide links that enable different pieces of software to communicate with each other, so they are a key component for many firms when integrating software.
An interesting point made by Tiller is that integration between technology processes and non-technology processes is also important.
“Not everyone wants to do digital 100% of the time. Some want support through a telephone call or a Teams call,” he says. “The key for me is understanding what tech is better at and what humans are better at.”
An escalating number of days are needed to respond to any queries
Getting this right is how advice firms potentially can position themselves to deal with younger clients, who will follow the more profitable Babyboomers. Automating more aspects of the advice process will save advisers time and reduce their costs, so they can perhaps see more clients and charge them less.
“What I see happening is the advisers of the Babyboomers will retire with their clients and sell their businesses on,” says McKenna. “Any advice firm that still wants to be around in the next 10–15 years will need to create a different model to support clients.”
In short, McKenna believes modern platforms are not fit for purpose.
“But they could be. All is not lost; there is time for them to change,” he says.
“However, most of the established order do not recognise they’ll be extinct if they don’t.”
This article featured in the August 2022 edition of MM.
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