Over half of advisers tell us that their back office system is more important for the day-to-day running of their businesses than the platforms they use. Back office systems have now established themselves as the primary technology system in adviser firms, although advisers do not downplay the role of platforms.
Around two-thirds of new business is being placed on a platform, as noted in last week’s newsletter – with the other third being transacted off-platform with DFMs, life insurance companies and asset managers. And that doesn’t take into account their clients’ non-investment related products and policies. The value of back office systems is how they pull together a holistic view of clients’ finances.
Advisers also tell us that they tend to use the client portals in their back office systems. They do use platform portals to view specific investment portfolios and performance, but advisers mostly depend on their back office systems to be their central resource for client communication and monitoring the overall portfolio.
Integration has been the main talking point – and often a point of friction – when it comes to the platform/back office relationship. Some platforms embrace integration more effectively than others – the key difference is how much data they share with third parties and how much they retain for competitive advantage.
Some large, restricted firms make the joined-up platform/back office work very well for their advisers – and there are potential efficiency gains in adopting this approach for smaller firms. But for now, most advisers recognise that platforms don’t really want to become advisers’ CRM systems, and back office systems won’t become advisers’ platforms. It is more about the two working better with each other to help advisers become more efficient.
We have just published our UK Adviser Platforms: Market Overview report, looking at the role platforms play in financial advisers’ businesses and addressing some of the key issues and trends facing the adviser platform market today. Download an outline of the report here.