This month's Retirement Planner Inquiry takes a look at how platforms are being used in the retirement planning market
It is well known that platforms have always had the potential to streamline and improve how the adviser carries out business. Being able to assess all of a client’s assets in one place and obtain up-to-date valuations more quickly than ever before enables the adviser to forge a closer working relationship with the client and assess their needs in a more holistic way.
While such an approach can pay real dividends in all areas of the advice process it is especially important in the retirement arena. Being able to see a client’s assets in their entirety can have a huge impact on the retirement planning strategy the adviser puts together for their client.
However, despite the real effect the use of platforms can have on the adviser community, their use up until now has been fairly low key. Indeed, while platforms have existed for many years in the UK marketplace it has only been the advent of the retail distribution review (RDR) that has acted as any real catalyst for the market. However, after a relatively slow start, it is expected that an increasing number of UK advisers will look more closely at platform offerings and seek to integrate them into their businesses.
In this Retirement Planner Inquiry we take a look at how advisers are using platforms in their retirement planning business and try to assess how the market will develop. The research was carried out via email questionnaire. A total of 285 recipients completed the questionnaire with the bulk of participants comprising independent financial advisers, financial planners and paraplanners.
Platform usage – quantity
The first question we asked our retirement planning advisers was how much they are actually using platforms at the moment. Just under half (47%) of participants said they were using platforms more than they had in the past. Of the remaining participants 32% said they were using platforms at the same level as usual and only 1% said they were using platforms less than they had previously. However, it is also important to note that 20% of participants said that they did not use a platform in their retirement planning business at all.
Where do you use platforms?
We then went on to ask the survey participants to say in what areas of their retirement planning business they found platforms most useful. Perhaps unsurprisingly investments came out on top with a staggering 92% of participants saying they used platforms in this way. Just over half (51%) said they found platforms most helpful when it came to pension planning while 21% said they were most useful when it came to devising non-pension related retirement strategies. Inheritance tax planning was also a popular use with 9% of participants saying they found platforms most useful in this area. One adviser who completed the survey said they used platforms to help them in all these areas.
Finally we asked survey participants to let us know how they feel the platform market could evolve to make them more useful in future. The responses were many and varied. According to one adviser platforms are “already working well and moving in the right direction” while several other advisers said they were happy with the functionality of the platforms they use. However, many other participants thought there remained much room for improvement if platforms are to become of real use in retirement planning in the future. Several advisers who took part in the survey said platforms were not as user friendly as they could be and that they need to become more intuitive in future. Other advisers asked for wider choices of investments to be included on platforms while others asked for the inclusion of products such as third way products, income drawdown and annuities. The inclusion of exchange traded funds was a popular choice also. Platform providers also came in for some criticism with several advisers calling for a reduction in charges and improvements in service. One participant actually called on platform providers to “Stop the marketing ‘spin’ and get on with developments that the users actually ask for” while another participant said “traditional insurance providers should give up trying to get involved in the platform market”.
Still a way to go
So it would seem that while platforms have made significant inroads into the retirement planning market they still have some way to go before they really meet financial advisers’ needs. While many advisers are using these products to help with investment or pension planning for instance there must be more that can be done to further improve functionality so platforms can be used in other areas too. While it was heartening to see such a large number of survey participants regularly using platforms as part of their retirement planning business, it is also fair to say that a large minority (20%) of participants said they did not use them at all at present. Whether this is because they feel the fees are too high, or functionality needs to be improved, is open to debate. It would seem platform providers would do well to engage further with the adviser community to gauge what they really want from platforms in the future. However, what is clear from this research is that many advisers are engaging with the platform market and these numbers look set to increase further in the run up to RDR – it would seem these products have a bright future ahead.
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