Paving the way for a new era in platforms

Agility in wealth management has never been more important. As advisers shift their focus from ongoing regulatory change into evolving their digital proposition to self-serve more efficiently, lift client outcomes and reduce investment costs, the platform market continues to evolve and create more flexibility and practice-focused functionality.

Initially, platforms were developed to increase efficiencies for advisers by streamlining the administration burden of investing across multiple retail unit trusts or shares.

Over time, platforms added more features and functionality to deliver better investment outcomes and reporting for end clients, further streamlining back-office administration and advice delivery for advisers.

The second generation of platforms focused on managed accounts, introducing enhanced investment menu capabilities, with cost benefits and improved investment management outcomes, while also offering significant efficiency in portfolio implementation and advice for advisers.

As we look forward, platforms are responding to support advisers deliver their evolving financial proposition in a fast and effective way while creating more personalised interactions with their clients. The top five platform trends we are seeing to respond to adviser needs are:

1. Customisation and flexibility

Platform technology is evolving allowing practices to deliver personalised experiences at scale. The rise of managed portfolios represent an exciting way for platforms to continue to differentiate their value proposition while giving advisers the ability to enjoy significant flexibility over the administration of client accounts. This is critical because it helps both licensees and advisers to construct investment portfolios in a cost-effective way, tailored to individual client needs.

Currently, one-quarter of all new client inflows are being placed into managed accounts and the volume of advisers using them has surged. Over half (56 per cent) of financial advisers use managed accounts today – up from just 18 per cent a decade ago – and a further 19 per cent indicate they plan to adopt them in the coming years.

Platforms like North have seen significant growth in managed portfolio assets under management, reflecting the considerable benefits and tax advantages they provide to advisers and their clients.

Managed portfolios are a more flexible investment vehicle compared to a traditional managed fund. By freeing up an adviser to focus on their clients’ overall investment strategies, tailored managed portfolio solutions can deliver considerable efficiencies and are a powerful step towards bridging the gap between off-the-shelf and fully tailored solutions.

2. Access to private markets

Breadth of investment choice is also critical for advisers. With Australian total household wealth rising, the number of high-net-worth individuals increasing, and advisers moving up the wealth curve, advisers are increasingly looking for more sophisticated investment solutions – such as private markets products which have traditionally been reserved for institutional investors.

The deep opportunity set that exists in private markets allows investors to diversify across a range of managers and strategies, which is now resulting in the steady emergence of private market products catering for high-net-worth individuals and even the upper affluent market. We are anticipating different ways to access these assets in a more diversified portfolio; this diversification piece is particularly important when markets become constrained.

Platforms are already looking at how to help more advisers get access to these solutions for their clients in a direct and seamless way. We expect this trend to continue in the near term, as more platforms offer unique private market investment opportunities to a broader retail audience.

This democratisation of access will allow advisers to take advantage of high-potential, illiquid assets that were previously inaccessible to retail investors, thereby enhancing diversification and potential returns for clients.

3. Retirement product innovation

For many Australians approaching retirement, the fear of running out is a major anxiety. With a growing number entering the decumulation phase, platforms are expected to provide innovative retirement income solutions that help clients optimise their lifelong savings.

The next five years will see the new breed of market-linked lifetime income solutions hit maturity, providing the benefits of pooling risk and return.

This includes tools like MyNorth Lifetime, which allows advisers to help clients maximise their Age Pension benefits and Centrelink Asset Test discounts, while giving them a market-linked income stream for life.

North data shows that advisers currently using a combined Account-Based Pension and market-linked lifetime income streams are already seeing income increases averaging around 50 per cent for clients – a critical outcome in the new landscape of retirement income.

4. Data security and integration

Today, as client engagement becomes increasingly digital, the role of both more intuitive and engaging opportunities as well as safeguarding data from bad actors is increasingly important to advisers.

Advice practices have focused significantly more on their tech stack, and we are seeing many bespoke solutions to significantly improve the client engagement experience.

Platform data needs to be a seamless component of this proposition. This means platforms need to be flexible on how to integrate across a broad range of advice technology, supporting a plug and play approach to smoothly onboard and manage data and advice implementation for advice firms.

In addition, revamped client reporting experiences will support more sophisticated advice propositions across clients’ wealth with visualisations and deeper engagement during the review process.

5. Advice efficiency by leveraging AI

The next frontier for platforms will centre around the ability for advisers to produce advice more efficiently than ever before, enhanced by the exciting potential of artificial intelligence to deliver seamless adviser experiences in real time to drive more value for clients.

The implementation of AI can also be a game-changer for platforms in helping advisers fulfil their complex compliance obligations, while improving client outcomes. The combination of automation with straight-through processing and AI will be key to driving true scale benefits for advice practices, in addition to maintaining fees at very competitive levels and other efficiency benefits.

Enhanced reporting and dashboard tools, powered by the latest advancements in AI, can also help advice firms drive improvements by better understanding client behaviour and responding to likely needs. It can also be applied to gain a greater awareness around client attrition issues, with AI-enabled predictive tools helping to identify clients at high risk of leaving.

The only constant is change

Advisers’ expectations continue to change, and platforms will continue to respond and be highly competitive across price, proposition and efficiency to suit their adviser and client needs.

How platforms respond to these five themes will make all the difference in helping advisers adapt and evolve, ensuring they can provide more Australians with financial confidence in retirement.

Edwina Maloney, group executive for platforms, AMP.