Adviser satisfaction unswayed by costly platform tech upgrades

Aviva and Aegon issues see other groups stay cautious


Advisers’ overall satisfaction with their primary investment platform remains flat year-on-year at 80%, despite recent technology upgrade issues, according to research by Platforum.

Upgraded systems are meant to enable more automation, better reporting, improved model portfolio functionality or integration with third-parties, says Richard Bradley, associate research director at Platforum, therefore platforms have been spending significant amounts of time and money on technology over the last few years, mostly on one-off platform migrations or upgrading systems.

It is interesting, then, that adviser satisfaction remains flat.

A catch-22 for platforms

A spokesperson for AJ Bell said: “Our replatforming project completed in 2014 for a cost of less than £10 million.  This has given us a stable platform for growth and our consistent track record of profitability means we are able to continually invest in the ongoing development of the platform to benefit advisers and customers.”

Clive Waller, managing director at CWC Research argued Nucleus, Transact and AJ Bell have never spent huge amounts yet are successful and profitable. In contrast, Old Mutual made a “costly mistake” by spending £330m on IFDS’s Blue Door before sacking them and then doing a deal with FNZ for some £150m.

A Quilter spokesperson said £220m of the spend was on their platform while the remainder went on its heritage life assurance business.

“The catch-22 for platforms is that as they succeed and acquire assets, both the need and the cost of systems upgrades grows. It is hoped newer, modular technology will be easier to replace than the old stuff,” adds Waller.

“I know that the Aviva issue made Aegon much more cautious. I suspect future replatforming will be spaced out, done in stages.”

Bradley agrees other groups are approaching their tech implementations more cautiously.

“Shifts have been pushed back, are being phased in more gradually, or being implemented more piecemeal. Many platforms are now shifting individual adviser firms, changing once piece of their proposition at a time or running two systems simultaneously rather than attempt a single large-scale shift.”

What’s the damage?

Bella Caridade-Ferreira, CEO at Fundscape, says several platforms are in the middle of major software upgrades of their technology, some of which haven’t gone particularly well.  “As well as the expense of upgrading the software, there are ongoing technology costs,” she says.

Portfolio Adviser contacted the largest D2C and advised platforms regarding technology costs.

Quilter is working with FNZ with cost estimates for the operational delivery of the platform around £120-160m.

HSBC said it wasn’t able to provide a specific breakdown for HSBC InvestDirect but confirmed that globally the bank spent $2.1bn on digital transformation between 2015 and 2017.

Zurich and Alliance Trust Savings would not disclose their technology spend.

Likewise, Standard Life Investment would not disclose its level of investment, but a spokesperson said: “We have continually invested in upgrading and developing our platform technology – for example we have just had the 50th technology release on our Wrap platform – to minimise the risks associated with substantial technology upgrades.

Hargreaves Lansdown said it owns its platform and maintains and develops its capability inhouse. “This gives us greater flexibility and control than if we were to use a third party platform.”

Barclays Stockbrokers and Fidelity failed to respond.

Adviser satisfaction with platforms surprises

Ben Yearsley, director at Shore Financial, says he is surprised adviser satisfaction with platforms sits at 80%, but he believes the technology spend is worthwhile. “In my view the important things with platforms are ensuring the website and basic functionality works well and consistently. Money should be spent on infrastructure to ensure it works all the time.”

Likewise, Tom Kean, director at Thameside Financial Planning, says: “All I need to know is that it works well and is fast. How it does it and what it costs the manufacturer is less important to me as long as it does what it says it will.”

Kean has stuck by “poor Aegon” even though he says they “have got it all wrong”. “Otherwise we use Elevate, which we love, other than its slightly expensive feel,” he adds.

Waller adds that advisers’ regulatory requirements to review platforms regularly could mean the firms’ issues will become history. “While smaller advisory firms may hold grudges, big distributors make cold objective decisions at exec, not adviser, levels. If the proposition is sound, the terms good and compliance stacks up – history will matter not,” he says.

However, Yearsley reckons shortcomings with Aegon and Aviva technology upgrades has had a lasting impact on their reputations. “Advisers have left and won’t return; therefore reputation has been damaged.”

Caridade-Ferreira adds: “Advisers may not have switched platform yet as a result of poor upgrade experiences but that doesn’t mean that they won’t eventually. It’s a big deal switching platform, so it would have to be a particularly bad and prolonged experience for advisers to take that route.”

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