Wealth platforms failing for advisers: Research

There is now an urgent need for wealth management platforms and planning software providers to integrate their services to better meet the evolving technological needs of financial advisers, according to the 2022 Adviser Technology Needs Report released by leading research firm Investment Trends.

One of the key concerns of financial advisers is the growing inability of existing wealth management platforms to share data and integrate effectively. Findings from the report showed that the main challenges facing advice businesses these days were: compliance burdens (65 per cent), the ability to provide affordable advice (41 per cent), and regulatory change (40 per cent).

Often, financial advisers found that their business was using two or more platforms to service the needs of its clients. Each platform has its own platform fees, technology, type of investments, its own appeal and usability. And with affordability being a key concern across the industry, advisers are desperate for a holistic solution that solves their ongoing compliance and client engagement issues without excessive fees.

The report found that platform integration with planning software was becoming an increasingly important issue. Without a platform solution that removes the current challenges and helps advisers to provide advice at an affordable rate, the study found that “advisers were turning to technology to help combat their many challenges, by intending to increase their practice’s current annual spend on technology from the current estimated average of $146,000 to $216,000.”

Currently there is not a one-size-fits-all platform that effectively accommodates all types of advisers and customers. While the bank-owned platforms do accommodate any type of customer, their approved product lists are quite limited, and internal-product-focused. Some platforms service a very niche segment of the market – Powerwrap services independent financial advisers (IFAs), stockbrokers, private bankers, asset managers and high-net-worth financial advisers, while Netwealth, services a much broader demographic with a lower average investment portfolio size to Powerwrap.

New start-ups and technology-based platforms are giving financial advisers the ability to hold, transact and administer across new and unique asset classes that solely benefit the underlying client, but nothing has been developed that fills the gap convincingly. And this failure is causing delays and errors in providing quality advice. The study found that overall adviser satisfaction with platforms has fallen (now 67 per cent, down from 72 per cent in 2021) with a total lack of support being the leading reason for client attrition (34 per cent of advisers stopped using a platform in the last 12 months).

Ishan Dan

Ishan is an experienced journalist covering The Inside Investor and The Insider Adviser publications.