The international advisory sector, and indeed the specialist international investment and insurance companies which combine with it in enabling a broader international financial services environment, has an enviable position in many respects.
Among these it is perhaps particularly enviable in terms of the perspective it can take on new developments, writes Guy Vanner, managing director of analytics firm AKG.
Straddling countries and engaging with internationally mobile customers, alongside a range of diverse partners, regulatory and other bodies, it has a view of developments, including technology, in numerous markets, whilst often being insulated, if it chooses to be, from some of the pace of any required change.
In many ways, developments are therefore signposted for international financial services before they become requisite. A factor which can lead to informing good practice, whilst also moderating or learning from early change that proves to be disadvantageous or overly painful in its implementation.
Like some IT upgrades, it is not always in your interests to have to adopt them on day one.
However, this ability to observe, review and to then sometimes delay can also see poor practice being held onto or perpetuated for reasons of expedience or even apathy. It is against this background therefore that the adoption of platforms in the international financial services arena might be considered.
Market dynamics
Established now in domestic markets such as Australia and the UK for a decade or two and available to some extent in the international space within most of that period, adoption at scale to date in the latter has been slower than might have been anticipated by many.
However, this is now changing.
Market dynamics, whilst delayed in their effects or acceptance as above, are now crystallising and leading to a growth in adoption and presenting significant further opportunity for international platforms.
These dynamics include:
- A greater focus on costs;
- Changing expectations in client experience;
- Increasing commonality of regulatory requirements;
- Changing best practice and advisory business models with greater transparency;
- Improvements in and a greater adoption of due diligence; and
- Increased customer-centricity of approach.
These drivers indicate a growing role for those platforms, whom within this context can provide solutions to meet the requirements of advisers and their clients in international financial advice settings.
Indeed, there are tangible benefits for both adviser productivity, automating and speeding up processes and delivering information more easily and clearly, and in driving better client experience including transparency and immediacy.
Aspects of each which could be considered as overdue in comparison with experience in other aspects of advisers’ and clients’ technologically enabled lives. Expectations which may not have been loudly articulated but could represent a potential dissatisfaction in terms of experience if not addressed.
What is meant by an international platform?
It may be easy to assume that everyone knows what a platform or international platform is. But actually, even for those that profess to know, it is useful to reflect on what might be properly encapsulated by the term.
Defining the extent and boundaries of any platform ‘market’ or what organisations can be deemed to be platform operators can be difficult and regulatory bodies acknowledge that activities differ among platform models and that the core function of a platform service may evolve over time.
In the UK, the FCA definition of a ‘platform service’ is a service which “involves arranging and safeguarding and administering assets: and distributes retail investment products which are offered to retail clients by more than one product provider; but is neither solely paid for by adviser charges, nor ancillary to the activity of managing investments for the retail client”.
Given increasing commonality of regulatory requirements, best practice and advisory business models, this definition can also be broadly applied in the wider context of the international advisory environment.
As is the case elsewhere, financial advisers operating in international markets, as they increasingly consider adopting platform technology, need to consider the financial strength of platform operators that they might use amongst a range of key due diligence factors which must be considered. Thus, they can meet regulatory and/or best practice responsibilities as well as considering the risks to their businesses, as good practice.
For AKG, it has been important to match this momentum and direction of platform development and adoption and as a result an international platforms peer group sector was established in June 2021.
The sector covers companies positioned as international platform operators or as providing a significant integral component of an international platform service operation. i.e., companies that might be seen to compete in the delivery of international platform services and capability.
It is a development that comes out of some initial consideration as part of AKG’s established assessments of platforms operating in the UK, but also considers specific aspects in the international context, including a focus on multi-currency functionality for example.
Platforms as part of wider business evolution
The use of platforms in international financial services, and the provision of advice in particular, is set to grow.
Whilst not presenting the market size of some domestic markets, it is tangible, presents significant growth opportunity for existing participants, and may even lead to some possible new entrants.
Crucially alongside enhancement for advisers and their business, if implemented right, it can also afford real benefits for clients.
Subject to time and effort in selecting the right platform, the objective having to be in selecting a long-term partner, the use of international platforms as part of a client centred advice infrastructure makes for an exciting component of current intermediary business evolution.
This article has been written for International Adviser by Guy Vanner, managing director of analytics firm AKG.
