In response, I point out that we are now operating in an increasingly digital world and that the role of platforms in delivering efficient financial solutions has evolved greatly in recent years.

One fundamental thing I stress is that a platform is not a product but best considered by them and their clients as a service delivered to both.

This is best illustrated by advisers themselves on the testimonials page on platform websites and where I direct people who pose this question.

A generic term

To illustrate this, I point out that companies that are familiar to everyone as household names – such as Amazon, Google and Uber – can also technically be considered platform providers.

Their business models are not simply all about sourcing new customers, instead they connect users to corresponding suppliers. When you look at it like that investment, platforms are no different in practice from these online retailers.

The Financial Conduct Authority =definition of a platform is ‘a service that distributes retail investment products which are offered to retail clients by more than one product provider’.

Put another way, it is a provider that sits between the portfolio investment holdings and the end investors looking to purchase them. Think about someone using the Uber app, which connects passengers looking for a ride with drivers who can take them to their destination.

Look through another lens

As already stated, it would be a basic mistake to simply view platforms as a product instead of a holistic service, and a position that ignores their true value to an adviser business in 2021.

These days, they offer so much more, for example by digitally enabling the integrated management of customers’ retirement/investment market risks.

By replacing a manual/paper-based process with one that is online, it eliminates the wasteful duplication of administration while providing a robust control environment – ultimately, this all adds up to advisers being better placed to deliver better client outcomes and, importantly, with the confidence that they are doing this in a compliant manner. It’s also incredible the difference that some simple reporting can make to a business, so if you don’t have any reporting set up then just a simple solution like that can make a huge difference to your business.

Where a platform is adopted as an adviser’s primary tool for managing and overseeing a client’s long-term savings, unlike traditional life company solutions, they can enable advisers to implement compliant and comprehensive financial planning strategies.

This is by way of easily aggregating pensions and general investments in the same place, usually with an aggregated ‘dashboard’ view for simplicity.

Therefore, they represent a way of seamlessly doing business in the face of increased regulatory and compliance pressure with digitised record keeping ensuring easy monitoring of client investments.

In simple terms a platform usually provides custody, aggregated trading, tax wrapping, reporting and open-architecture access to a wide range of differing assets. In practice, this is via an online system that makes it easier for a client’s financial plan to be implemented – with advisers able to trade, safeguard, administer and track investments across a range of product wrappers.

For advisers, that means providing straightforward and low cost access to the assets and products that their clients want and also the tools they need to reduce the time they spend on administering this relationship.

Interaction and engagement

For a successful platform partnership, the provider also needs to ensure that there is a user-friendly client interface too. This is vital because this is how they will ultimately ‘experience’ their financial planning.

However, not all investment platforms are the same and don’t offer the same services and functionality.

What services a platform provides will determine how the client will interact with their investment and pension plans. Some platforms are built only to support the advisory process, assisting advisers to offer an excellent client experience.

Other platforms, however, are built for the direct market and give the non-advised end user simplified and basic information on investments and wrappers that they hold.

Overall though, regardless of type, either style must ensure a positive outcome and user experience in order to be seen as a success and widely adopted by advisers and clients alike.

Having evolved greatly over the past decade, platforms are now seen as mainstream and have revolutionised the way that they interact with the global advice market.

With the assistance of increased and tighter regulatory regimes globally, they have challenged the status quo and legacy offline solutions, engineering a new way forward along the way.

With this environment likely to continue into the post-covid future, adoption of a platform service into an adviser business model is key for them to keep up with this pace of change and more critically, still remain relevant and of value to global client and their demands and expectations.

This article was written for International Adviser by Steve Andrews, managing director of Novia Global.

Crediting the firm’s growing presence in the international pensions and savings market, managing director Steve Andrews said: “As a consequence of the record inflows we have experienced this year, we are delighted to reach this significant milestone.”

It comes less than a year after the international business set out on its own, following parent company Novia Financial being sold to US private equity outfit AnaCap Financial Partners in December 2020.

Building Relationships

Andrews added: “Building successful and sustainable relationships has been a key strategy for our growth. When an adviser selects a platform as their primary tool for managing and overseeing their client’s savings, there are a number of factors that are key to forming a successful relationship. Most importantly, they must be able to trust us to look after their client’s money.

“They also know that a platform offers low cost access to the assets and products that their clients want, along with access to a system and the tools that they need to help reduce the time they spend on administration. A user-friendly experience is also very important to forming a successful long-term relationship, as this is ultimately how their clients will ‘experience’ their financial planning.

“The other key factor is service. Most of the everyday tasks and processes are carried out completely online, however, it is important to have human support available as and when it is required. This is why we’ve recently expanded our client services team, not only to ensure that our service standards remain at the level our users expect, but it also demonstrates our commitment to future growth by ensuring that we are well equipped to deal with any future challenges.

“Achieving this milestone offers me the opportunity to thank all our supporting advisers and clients for helping us reach this position. We couldn’t have done it without their help and support and I’m looking forward to building on our existing relationships as we embark on our journey towards the next milestone.”

Until 2000 the UK retail investment market was dominated by life companies – almost all of which have now disappeared or have had to change their businesses towards platforms, writes Steve Andrews, managing director at Novia Global.

But what life companies traditionally had in common was a ‘one stop shop’ of administration, investment, and paying advisers to market their offerings – which brought conflicts of interest to advisers and many were uncomfortable with.

Unfortunately, what also characterised them was limited, in-house investment choice, poor administration and opacity with the result that investors got a very poor deal and advisers were reliant upon them not only for the client outcome, but also for making a living through the payment of ‘commission’.

International transition

On the opposite end of the spectrum, platforms deliver a much more efficient business solution through the use of technology, a market wide investment choice, the ability for advisers to set their own rates of payment and, most importantly of all, transparency, which is at the heart of a good outcome for investors.

Also, just as in the UK, offshore advisers are having to change their business models away from an inefficient transactional initial commission model and dependency on life companies into a much more sustainable service model where they are able to set their own charges for the advice supplied and deliver a better outcome to their customers.

Transition from one model, which is reliant on money up front, to one where payment is payable over the lifetime of the customer relationship for on-going service, is financially painful in the early days as the challenge of cashflow bites, but that transition is now well underway in the offshore markets and the destination inevitable.

Paperless models

One of the big drivers of change has undoubtedly been the arrival of technology in offshore platforms.

Up until very recently, platforms active in the offshore markets have operated largely on a paper-based model where the operational efficiencies that a platform can provide have been absent.

But the days of the post and faxes are nearly over and we are seeing a number of platforms invest in technology that will transform the market. The platforms that do invest in technology will be the winners and those that don’t just won’t exist in a few years’ time.

We are seeing the transition away from a cottage industry towards professional scale businesses.

At the same time, as advisers are beginning to appreciate the benefits that technology-enabled platforms are bringing to their businesses, we are also seeing regulatory pressure increasing globally in a move for more transparent Retail Distribution Review-style (RDR) advice processes that are more easily achieved via a clean share class proposition on platforms, with 24/7 client online access and visibility.

Rise of the Sipp

The recent Financial Conduct Authority (FCA) bulletin on the use of investment bonds inside pension wrappers will deter advisers from selecting this once popular, indeed ubiquitous, option.

For UK expats, evidence already suggests advisers prefer a platform Sipp proposition. Other providers in this space are now opening up the market on a similar basis, clearly demonstrating this is the way the market is heading.

Large back books of outdated bond business are now being migrated by advisers to platforms  in order to enable advice firms to afford their ongoing advice process while, at the same time, offering their clients a more cost effective basis with the use of platform clean share classes.

This move is underway and inevitable. To add to this, clients are now more savvy than ever and can easily undertake on-line research and can tell if advisers are doing what is best for them.

Increasingly, as they Google, they will see platforms getting more positive feedback and other commission-style products receiving negative feedback.

Centralised investment solutions

We haven’t seen the widespread adoption of centralised investment propositions (CIPs), which is practically universal in the UK and greatly facilitated by platforms, but this will inevitably follow soon.

CIPs tend to follow two routes, either advisers build their own models or they outsource them to a discretionary fund manager (DFM).

Either way, the solution is easily managed through the use of a platform and what works to the advantage of the client and adviser is that if a DFM under-performs, the adviser can sack the DFM firm and replace it, literally at the flick of a switch, with another firm.

We really are on the cusp of change and, in fact, it really is happening already. 2021 will be the year that the old opaque model is replaced by a better solution for advisers and their clients.

This article was written for International Adviser by Steve Andrews, managing director at Novia Global.

This “5 minutes with…” series sees International Adviser chat with both long-standing figures and newcomers to find out what motivated them to join financial services and, importantly, why they have chosen to make a career out of it.

In the video above, Steve Andrews talks about what motivated him to join international platform Novia Global last year.

He also shares how attending a financial advice seminar for workers facing redundancy cemented his committment to the industry.