Change is an unavoidable fact of life for a financial adviser. For many years, investment wrap platforms were a major cause of change, but they are now an established part of the value chain, and platform change has subtler implications for advisers.
Headlines about the platform sector have gradually shifted from heralding assets under administration milestones to focusing on technology upgrades and consolidation. Read beyond the headlines and you get a sense change has become a challenge for the platform sector.
Apart from the self-inflicted challenges of technology change and migration, there are plenty of external forces poised to add complexity to the change programmes of investment platforms over the next few years. Mifid II is imminent, General Data Protection Regulation and the second Payment Services Directive are on the horizon, more pension reform seems inevitable, and Brexit is the very definition of uncertainty.
What this means for advisers is it is no longer enough to pick a platform based on what it can do today or has planned for tomorrow. Advisers have to ask about the platform’s capability to deliver change.
Change introduces new levels of complexity: more requirements to manage, new potential points of failure, more release cycles, more suppliers to work with, more customer data to manage, and more governance. Organisations that are adept at change management, and can evidence it, will prosper in the long run and should be sought out by advisers.
Full interrogation
How do you establish something as intangible as the level of flexibility and enthusiasm for change of your platform partner? While it may seem an abstract concept, flexibility and enthusiasm can be tested.
The first thing to do is look for evidence of an active user group: ask how feedback is prioritised and incorporated into future plans, and check the roadmap of future developments. Even more importantly, ask to see previous versions of the roadmap and check the planned developments were delivered.
Having established how change is planned, the next question is how those plans are delivered. How are change projects structured? Is there a dedicated change function with a track record, or are projects staffed by regular employees?
Is there a visible change process with evidence of governance: steering groups, approvals and examples of rejections to prove bad ideas are weeded out?
Crisis plan
What about the system’s coalface? We all know business change means software change, so how does a provider manage the release of updates in a world where platforms are made up of multiple components on different machines, in different data centres, and sometimes in different countries?
How do platforms insulate their clients from the failure of one of these components and how robust is their disaster recovery? It may seem strange but evidence of a platform experiencing a disaster and managing their way through it is a strong indicator of its technology maturity.
Whether we like it or not, the rate of change in our profession shows no sign of slowing down and the costs involved will continue to be substantial. It is not enough to select a platform based purely on its performance today, or on a slick presentation about the new functionality planned for tomorrow.
Advisers need to ask how well the platform will handle and deliver change in the future. That ability will be the key to the success of platforms (and their clients) in the long term.
Kevin Okell is director at Altus Consulting.