Platforms were devised to relieve the portfolio administration headaches of financial planners and investment advisers. They were meant to be an administration tool that enhanced your efficiency and relieved you of non-core (but critical) parts of your business.
Last century, to make back-office portfolio administration and reporting more efficient, client investment portfolios started to shift away from directly held assets towards ‘Platforms’. First it was ‘Masterfunds’ that were hailed as back-office efficiency drivers and then earlier this century, Investor Directed Portfolio Services’ started to take the limelight.
Fast forward to today. ASIC treats platforms as financial products; the best interests’ duty applies equally to platform recommendations and investment strategy; pages in your SoA are filled with explanations of why the features and services of the recommended platform are suitable for your clients and how the available investments were selected by your platform operator.
Counter-intuitively, and adding to the rapidly mounting compliance burden that comes with using a financial product, advisers are most commonly using three or more platforms in their practices. Platforms – originally designed to make advisers more efficient – are now actually creating inefficiencies as businesses lose the benefits of a single back office solution.
Oh, and now to remain compliant with the Design and Distribution Obligations your platform may require you to attest to the fact that your clients received personal advice in relation to a platform recommendation and/or that the advice is current and consistent with the platforms stated Target Market Determination.
As they say, ‘history doesn’t repeat itself, but it often rhymes’.
Technology, our industry, and portfolio construction have come a long way since the early days of platforms. In a post-walkman, post-MySpace and post-Hayne environment, If the aim of using a platform was to simplify your portfolio administration it’s not only worth asking if using platforms is in the clients’ best interests, but it’s timely to ask if using platforms is also still in your best interests.
We know that private client advisers are seeking out more alternative investment solutions for their clients’ portfolios and want to look beyond the confines of a platforms ‘approved product list’.
Imagine a future where you had all the benefits of a platform but without the complications, restrictions, and headaches of a product structure.
Imagine if constructing investment portfolios wasn’t dependent upon a product provider’s menu or if you didn’t have to provide financial product advice for an administration and reporting solution.
For over 10 years, Integrated Portfolio Solutions has been helping investment advisers and private client businesses to focus on what they do best: delivering quality client investment experiences and service excellence – without a product wrapper. We replace the headache of managing back-office portfolio administration with the pleasure of knowing that wherever you choose to invest your clients’ portfolios, we’ve got you covered.
Portfolio administration, tax and consolidated reporting on whatever asset you want to invest in? The future looks a lot like the past – just without the product wrapper.
