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Platform 'arms race' heats up

Competition in the investment platform market has intensified as providers scramble to ‘out-innovate’ one another on FOFA compliance, according to Investment Trends.

The new Investment Trends Platform Report found that providers have been focusing on addressing calls from financial planning groups for enhancements to usability, reporting and support.

Investment Trends senior analyst Recep Peker said regulatory compliance absorbed around half of platforms’ total development expenditure in 2013.

“But the platform functionality arms race has continued,” said Mr Peker. “Platforms continue to evolve through offering planners tools that help them run their business more efficiently while meeting their regulatory obligations.” 

Platform providers have also responded well to planner calls for direct shares and corporate actions functionality, as well as building fee disclosure statement (FDS) functionality “from scratch”, said Mr Peker.

“The level of development is reflective of the high level of competition in the industry. Platforms can very easily be overtaken by rivals if they do not keep innovating and meeting planners’ needs,” he said.

When it comes to FDS functionality specifically, the response of platforms has been “varied”, according to Investment Trends.

“A couple of platforms are still waiting on the reforms to find more concrete footing, while others gave planners a CSV document detailing the fees and leaving it to them to establish their own ways of delivering on their FDS requirements,” the researcher said.

“The majority of platforms have gone further, with functionality tracking key dates and services provided, alerts and FDS generation.

“The most feature-rich FDS functionality was delivered by Asgard eWrap, which includes bulk (multiple clients at the same time) FDS generation,” said Investment Trends.

According to the report, the top four platforms by FDS functionality are Asgard eWrap, Macquarie Wrap, Perpetual Private Wrap (equal second) and BT Wrap.

When it comes to full-function platforms (with a wide range of investments including direct equities) the top five according to the report were CFS FirstWrap, netwealth, Asgard eWrap, MLC Wrap & Navigator, and HUB24.

The report was based on face-to-face reviews of 25 leading master trust and wrap platforms.

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

Investment Trends found that their spend on developing new functionality was only slightly greater than their spend on regulatory compliance.