In a webinar, Finura Group joint managing director Peter Worn said that the number of advice practices using a single platform has doubled in the past 12 months, from just 6 per cent to 12 per cent.
While operating with just one platform is standard practice in the US, this has largely not been the case in Australia.
Worn explained that this is due in part to a legacy of advice firms switching licensees overtime and encountering different approved product lists (APL), resulting in the gradual accumulation of different products.
“Platform innovation always means that you’re jumping from platform to platform, because there’s always new things coming and pricing. Pricing has been so aggressive but if you strip it all back, one of the issues we find when consulting practices is the data challenge doesn’t go away,” Worn said.
He explained that many of the systemic issues of “bad data” are caused by having data across several different platforms, leaving some practices to conclude that the only fix is cutting back their tech stack.
“We’re finding that practices are saying, ‘You know what, I think a lot of my problem is I’ve got too many product providers. I can’t necessarily fix data feeds, but what I can do is use those product providers’,” Worn said.
Finura head of consulting Danni Le Grande added: “It does make sense that this is getting serious review in advice businesses. Multiple platforms means multiple application forms, multiple ways and processes of dealing with different providers, which obviously equals pain for those back and middle offices and a delay in the advice potentially being implemented.”
Were this trend of consolidation to continue, Finura predicted that platform providers that can successfully deliver end-to-end solutions, spanning advice delivery, practice management and client engagement “will win in this new landscape”.
However, as Netwealth and HUB24 maintain a strong grasp on a considerable portion of the market, in addition to advisers’ lack of spending on software, some platforms will be at risk of falling to the wayside.
The profession’s enduring inability to grow its numbers since the royal commission also poses a challenge for platform providers as the number of potential clients remains static, severely hindering growth potential while also driving up the cost for advisers.
“In reality, we have a lot of tech vendors sort of competing over quite a small pie, we would say, and the trouble is that pie is not growing,” Worn said.
He added: “If this gains traction, I think we’re going to see one of the great arms races of all time to consolidate platform usage across the 15,000 advisers in Australia.
“I don’t necessarily know what it means, but if I was a platform right now, I would be war-rooming that scenario as to what would play out if this actually got more and more momentum.”
