Investment platform pricing and underlying investment management costs continue to be the prominent factors in adviser platform selection, CoreData Research has found.
Almost a third (27%) of advisers cite cost, fees and charging structures as the main factor that would encourage them to select a platform, according to the annual CoreData Research Investment Platform Study for 2013.
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"Adviser sentiment is reflecting what we’re seeing out in the market. The gloves are off as the industry begins to do what every other mature – some may say commoditised – industry does; it begins to compete primarily on price," CoreData principal for Europe and UK Craig Phillips says.
"We are entering a perilous stage of market development – think Mutually Assured Destruction (MAD) but where fall out is not from mushroom clouds but clouded pricing.
"With platforms short of profits to reinvest, systems will start to creak and fall over – more human error will occur as under-resourced teams struggle to meet demand. And adviser efficiency will consequently suffer.
"It becomes a race to the bottom – not quite Apocalypse Now but certainly a bleak scenario. Platforms need to focus on service and justify their charges through differentiated service – not playing ‘me too’ in a game of pricing Russian roulette," Phillips adds.
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By GlobalDataBased on feedback from 1,056 UK financial advisers; in a post-RDR world, the importance of cost continues to drive many business decisions for advisers as business margins continue to be tightened.
Ease of use/functionality (22.9%) and good administration and service (19%) were also seen as important cogs in platform selection.
In terms of adviser satisfaction with their main platform provider, the study finds that a combination of online transaction functionality (31%), reliability and security of the technology (23.1%) and ease of re-registering assets on and off the platform (21.8%) accounted for three quarters of the overall statistical drivers of adviser satisfaction.
Online transaction functionality (41.7%) was also the biggest factor for overall satisfaction for secondary platform use. Online information, which has little influence on adviser satisfaction on the main platform (4.1%), had a much greater influence to overall satisfaction on secondary platforms (22.7%).
Meanwhile, advisers highlight Sipps and other complex pension products; annuities and income drawdown; and discretionary investment management services as the three products and services they would like to have access to on the platforms they use.
Phillips says, "Trends reveal the opportunity for new business for platforms has been in decline since 2011. This is reflected by the fact that satisfaction among advisers towards their main platform is on the rise. More than a third (35.9%) of advisers would now recommend their main platform to another adviser.
"However, there are still areas of the market that advisers would like to see improved and platforms will need to address this given the number of alternative offerings. This is particularly relevant for second choice platforms where the level of satisfaction is not as strong."
As part of the study, CoreData Research carries out analysis of more than 40 service level metrics which result in platforms being categorised into three groups – Large, Medium and Emerging Platforms.
Transact was once again deemed the best platform overall in the industry and also the best Large platform (for the fourth year in a row). Nucleus takes first place in the Medium platform group and Parmenion was deemed the best in the Emerging category.
In terms of those highly commended, Standard Life rated well within the Large category, Axa’s Elevate in the Medium category and Novia in the Emerging category. In the overall category, highly commended went to Parmenion.
Further data points:
- 97% of investment advisers have used a platform in the past 12 months, unchanged from 2012.
- Within the next year, almost one in five advisers (19.9%) is likely to add at least one additional platform to their business.
- More advisers are now using three or four platforms to conduct their business.
- Over a third (34.5%) are now using three (compared to 30.4% in 2012), while 18.1% are now using four (vs. 13.7% in 2012).
- This is counter to what one might expect as businesses consolidate post-RDR, however perhaps as a result of segmenting clients, it’s a case of different platforms for different client requirements.
- Fewer advisers are only using one platform this year (12% vs. 16% in 2012).
