Compliance absorbs platforms’ spend: report

Greater innovation needed by platforms.


By Krystine Lumanta

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Regulatory compliance made up about half of platforms’ total development expenditure in 2013, according to the latest research from Investment Trends.

The “December 2013 Platforms Report” revealed platform spend on developing new functionality was only slightly greater than the spend on regulatory compliance.

This was the first year platform providers were asked to distinguish between functionality and compliance expenditure.

Investment Trends senior analyst Recep Peker said despite the proportion of money used for regulatory compliance, platform functionality had continued to evolve strongly in response to financial planners’ needs.

“It has become a very tight race at the top,” Peker told financialobserver.

“As platform functionality begins to converge at the top end, platforms really need to differentiate their offering from their competitors through innovating.

“In particular, some of the smaller platforms like netwealth are nimble and able to develop functionality a lot more quickly, but it’s not just the smaller platforms; the big ones are also innovating, so it has been very competitive.”

The report found common areas that platform development focused on at an industry level included enhancement to usability, adviser support, reporting, direct shares and corporate actions functionality, in addition to building fee disclosure functionality from scratch.

“The level of development is reflective of the high level of competition in the industry,” Peker said.

“Platforms can very easily be overtaken by rivals if they do not keep innovating and meet planners’ needs.”

Among full function platforms, the report named CFS FirstWrap as the number one ranked platform in terms of overall functionality for the second year in a row.

It was followed by netwealth, Asgard eWrap, MLC Wrap and Navigator, and Hub24.

The report was based on comprehensive face-to-face reviews of 25 leading master trust and wrap platforms, covering 454 key characteristics of each platform and its associated service offering.

Of the 13 platform providers assessed, eight provided information on their development and regulatory compliance expenditure separately.

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