The asset management consultancy reviewed processes like setting up and topping up pensions, ISAs and bonds across 15 adviser platforms, as well as withdrawing money from those products and switching and moving money.
Specifically, the Lang Cat looked at the firms’ integration of straight through processing (STP), which allows companies to share information electronically, streamlining the transaction processing time.
While the Lang Cat found that at least one platform operates STP for each of the transactions assessed, it discovered that no single platform was fully digital for all transactions.
Most platforms in the study (80%) operated STP for ISA top ups during “onboarding” of new customers but less than a third offered this service for bond top ups. When moving money, only 40% of platforms used STP for re-registration on or off the platform.
The Lang Cat also found that 20% of the platforms in its study do not offer STP for money laundering checks.
Despite advertising themselves as tech-savvy outfits, most advised platforms are still “mired in old-school financial services processes,” with many continuing to operate operate on a combination of signature-based paper and telephone processes, said Terry Huddart, market analysis manager at the Lang Cat.
But Rohan Sivajoti, director of Postcard Planning and founding member of NextGen Planners, said it’s not always the “old guard life companies” that are the worst offenders, noting “some of the ‘new age’ platforms are the furthest behind”.
Adviser platforms are costing themselves time and money by failing to embrace more efficient ways of executing transactions, Sivajoti added.
“The old-world inefficiency of platforms demanding printed application forms and wet signatures adds significantly to the time and money advisers spend performing what should be simple actions, not to mention the time the client has to wait to get their money into the market. Yet the technology, legality and processes already exist to make these actions fully digital.”
The platform industry’s failure to keep pace with the changing technological landscape is one of the reasons why Lang Cat boss Mark Polson (pictured) has proclaimed “platforms are dead”.
The £400bn industry, which includes both advised and D2C businesses, has already shown signs its market dominance is slipping, with fund platforms accounting for 36.7% of gross retail sales in the UK in January 2018, compared to 45.8% a year ago, according to the Investment Association.
A big part of advised platforms’ sluggish segue to going fully digital relates to security issues. Though safeguarding client money “is no easy feat,” admitted Huddart, the reality is “in the direct platform market, customers can open, fund and invest in an ISA in minutes”.
“It’s incredible that full STP functionality is not readily available in adviser world,” he continued. “We know that there is work going on in this area, but some platforms need to push it higher up the agenda or advisers could start voting with their feet.”
