More and more advisers seem to be moving all their clients onto a single platform. Does this mean clients are at risk of putting ‘all their eggs in one basket’ or is there a continued need for consolidation?
The shift is in line with confirmation from the FCA some time ago that IFAs can use a single platform to service ‘the majority’ of their clients, as long as it is in line with the client’s best interests and leads to suitable advice.
But what do clients view as being important?
In a competitive marketplace, there may be many different reasons why a client might choose their adviser at outset or, later, change adviser. Of course, lower fees are often a driving force but a recent survey in the US by Forrester found other reasons played a part too.
Online channels, video chat and data sharing were quoted by 44% of respondents as being significant in the decision to move to a new adviser.
However, an even higher number, 57%, said that being offered access to all investments and accounts in one place with a single login would encourage them to change adviser.
And there were variations across the generations. It was interesting to note that only about a quarter of Millennial and Gen X (35-54) clients preferred a self-service robo-adviser if it meant lower fees. The survey showed that about 50% of clients would still rather have a dedicated adviser instead of a robo-adviser, even if they had to pay higher fees for that human interaction.
As such store is set on the personal relationship with an adviser, the challenge for those developing and delivering technology led solutions is to focus on supporting advisers so they can maintain those values in the digital interface. Communication channels can still be clear, friendly and make information more accessible.
And what does a consolidated platform offer?
Consolidation offers many benefits. For example, it helps advisers to better manage clients’ risk and exposure. It also gives transparency across a client’s entire portfolio.
A single platform can also lead to simpler admin. This makes essential but painful tasks like portfolio rebalancing each quarter become a much easier process for both client and adviser.
It also appeals to many clients because it gives them access to all their investments in one place.
And anything that simplifies matters is a good thing.
Let’s face it, the financial world is complex and full of jargon. Added to which, your clients are no doubt busy people.
They probably came to you in the first place because they don’t particularly enjoy keeping on top of their finances themselves.
They certainly don’t want reams of papers, complicated statements and spreadsheets.
What they do want is to be able to check their whole portfolio with one login so they can see at a glance how all their investments are doing.
So if you can provide them with a single easy-to use interface, they’ll appreciate you making their finances more accessible.
And, of course, using a single platform doesn’t mean the role of the adviser becomes any less significant to the ongoing client relationship.
All things considered, it would seem consolidation is a good thing. It’s certainly a movement that is gathering momentum and as long as the platform allows the adviser to remain fully independent, the advantages are to be welcomed.