Financial advisers harness new wave of platform tech to improve client service and cut costs
The growth of platform technology shows no sign of abating, with more than a third (36%) of financial advisers expecting to direct more business to platforms over the next 12 months, according to Aegon’s new Adviser Attitudes Report: Technology in the Financial Advice Market.
This rises to nearly half (47%) amongst adviser firms with six employees or more. Only 2% of advisers said that they expect to place less business on platforms.
The platform sector is seeing significant growth with total assets under administration increasing by 6% in the first quarter of 2017 to £520bn. By 2021 it is expected to surpass £1.2 trillion.
And advisers are clear on the benefits for clients. Two thirds (66%) say that the greater convenience and time efficiency that platforms offer clients is the main reason that they are beneficial. A similar number (63%) point to the value to clients of the wide range of investments available.
The number one benefit however, shared by 86% of advisers, is straight through processing and the ability to transact without paper. Other key benefits for clients include lower charges (39%), making financial planning more straightforward (36%), and the speed that client requests are able to be processed (34%).
A third (36%) of advisers expect to direct more business to tech platforms over the next 12 months, with overall assets on tech platforms expected to surpass £1.2 trillion by 2021
More than four in five (86%) advisers find that platform technology makes providing advice more cost effective
Convenience and a wide range of investment choices is seen as particularly beneficial to clients
While cost is not the key driver behind platform usage amongst advisers, the efficiencies they provide are significant. More than four in five (86%) advisers find that platform technology makes the process of providing advice more cost effective, while a similar proportion (82%) believe that it makes the process more straightforward. More than half (57%) of advisers see cost efficiencies that they are able to pass on to clients as being the greatest benefit of the technology.
Looking at the type of client for whom an adviser would typically use a platform, a quarter (24%) see it as a suitable option for all clients, while two thirds (65%) would judge it on a case by case basis.
Advisers also revealed that the top reasons for using a platform over a traditional life company are the access they give to better investment choice (fund options and access to Discretionary Fund Managers) (63%) and because it helps manage a range of products and investments in one easy-to-use portal (58%).
Steven Cameron, Pensions Director at Aegon, said: “The new wave of technology in the financial services sector is having a transformative effect, offering opportunities for innovative products and services. Platforms in particular are changing the industry, and it’s clear that advisers are positive about the possibilities. Platforms streamline their workloads, but more importantly for them, they enable advisers to better service their clients.
“The significant growth of defined contribution schemes and the popularity of the pension freedoms, with many more people remaining invested during retirement, mean the importance of advisers supporting investment decisions continues to grow.
“This has helped shape the evolving platform market, and platform providers have a central role to play in working with the intermediary community to ensure that platforms continue to offer the best possible tools to support advisers and their clients.”