Paving the way for platforms

Platforms have been part of the financial services landscape for over two decades, but they now have the opportunity to gather further momentum if they can provide the service required for clients in and at retirement.

Over the years, platform solutions have improved tenfold, with additional improvements constantly being made, granting advisers and clients greater oversight and control of their investment portfolios. When constructing a footpath, you need to ensure that you have a strong and flat foundation in place to support the weight of the slabs. A similar approach applies to platform solutions, which require a solid infrastructure to support the evolving demands of users.

We have also witnessed the meteoric rise of platforms since they were first launched in the UK, in 1999, when they were primarily used to execute simple trade transactions and view valuations within general investment portfolios. For the best part of the past 20 years, these solutions have been viewed as a means to accumulate wealth, and they will continue being an effective tool for wealth generation. However, in 2022, we believe that we will see a shift in mindset as advisers begin to take advantage of more modern platform features, particularly for their clients that have entered retirement, with decumulation becoming a more prominent theme.

We expect platforms to be a tool to allow clients to not only accumulate their wealth, but also serve as a vehicle that allows them to take their retirement income however they desire throughout their later life. Historically, platforms have not been overly popular in the retirement space, despite it now being seven years since the introduction of Pension Freedoms. But all that is now changing.

Benefits of using a platform solution

When laying a new path, a lot of time, care and consideration is put into deciding which materials are best to use, and the answer will almost always differ depending on each individual’s preference; whether they are focusing on aesthetic, cost, or practicality. However, no matter the material, the purpose of the path remains the same. A similar approach applies when discussing platform solutions; while they are generally used to carry out the same functions, many providers will focus on different aspects.

Typically, the three key characteristics that you want to look for in a platform solution are: engaging experience, flexibility and security. We want clients and advisers to have the ability to view their entire portfolios in one central location, with access to high-quality digital reporting, therefore making their lives easier, and that is why we place such a high focus on delivering an engaging experience. Flexibility is arguably the most important characteristic of them all, and providers need to be acutely aware that client and adviser needs are ever-changing and can range from straight-forward investment management to more complex financial planning arrangements. When dealing with sensitive information, such as financial accounts, emphasis on security is paramount, with providers needing remarkably high security standards to ensure that your assets are held under safe custody.

Flexibility, in particular, is crucial when discussing how a platform solution can benefit individuals in retirement. For example, if a client requires flexibility with their retirement income and they are happy to take a level of investment risk, but also require a level of certainty that the income is sustainable, then they have a range of services available to them through one centralised solution, and those services can be coupled together, giving clients a broad range of options. However, it is important to note that these funds are not suitable for everyone, so it is important to consult an adviser before making any investment decisions.

Collaboration is crucial when building a path and when enhancing a new solution, particularly one that is designed to aid and support advisers in meeting the varying requirements of their clients, especially those in retirement who now look to benefit from many years of saving. This, coupled with a shifting mindset over the past couple of years, will pave the way for platform solutions in 2022.

A version of this article first appeared in the Money Marketing on 27 January 2022.
https://www.moneymarketing.co.uk/opinion/platforms-could-play-a-bigger-part-in-advice/