Lots and lots and lots of talk about what will be the key differentiator which will separate the winners from the losers. There are only so many things a platform can offer. Most of them offer too many things already and could already do with a damn good pruning. There’s plenty of discussion on price already and the virtuous @theactualpolson offers great comments on this and more at http://langcatfinancial.co.uk/blog/.
I believe the key to sustainable platform growth will be usability. This will be the key factor in deciding success versus failure.
This is why.
Price will inevitably even itself out in the same way as every other platform feature over time. It will become as marginal in decision making as many other platform features have already become – hygiene points covered in a boring questionnaire. Platforms which are completely out of kilter with mainstream pricing will simply die off or become legacy platforms.
The major problem for most platforms in achieving profitability is the cost of acquiring, onboarding and supporting advisory businesses. Smaller platforms are able to advance more swiftly towards profit by keeping this overhead low. At the same time they are precluded from access into the mass market because of lower levels of resource and profits can be well managed but relatively small compared to the manufacturing profits of old. Big platforms have more mass market success but carry a far higher overhead, and in turn a much higher net asset target for a return, albeit a much bigger return. Nothing new here so far.
Imagine a platform with all the requisite functionality but conforming to such high levels of usability that required no training and limited support to use it. It could be made available to every adviser with no commitment to use it, you could try it and if you didn’t like it leave it. You could use it transactionally, occasionally, in conjunction with other platforms, or as the only platform you ever want to use. Sounds like a winner? There are plenty of things a platform like that would need to have. But the one thing which would be critical, inescapable, would be usability. No commercial model would support a platform like that if it had to be sold, signed up, set up and supported in the way platforms have to be handled at the moment. Strip out all those costs and you can pretty much pick your own price, low or high. You’re the platform who will dictate price.
What’s really interesting is that most platforms have different routes to usability. Some, like Standard and Axa, are already investing heavily in experienced in house teams to deliver this outcome. Skandia are already releasing their new look and feel. Zurich have built their own user interface rather than take FNZ’s own to control the front end experience. Nucleus have their users as shareholders who take an active and passionate interest in driving the usability of the system. Novia brought their previous experience with them from their Selestia days. The key, regardless of the resources used, is adopting an agile approach to development. This is a significant cultural shift for many.
There isn’t a right or wrong route or resource, and I definitely don’t see any clear favourites in this race yet. I reckon I’ve got a fair eye for decent technology but most detailed platform demos are still wasted on me. And most advisers for that matter. The best test drive any platform can get is to try it out on paraplanners as they use the damn things every day. If they give it the thumbs up’ you might be on to something.
Watch this space. Usability will be the deciding factor. Agility is the secret.