In today’s volatile markets, wealth managers and DFMs need more than just decent investment performance to demonstrate true value. In her latest blog for Wealth DFM, Linda Johnstone, Head of Investment Proposition at Novia Global, explores how platforms can underpin diversification, transparency and robust service, the essential ingredients in building lasting adviser-client relationships.
What does the average client look for in an adviser? Particularly among those with relatively little experience of investing, the knee-jerk response to this question usually revolves around a capacity to make money.
Something akin to such an attribute definitely helps, of course. After all, no-one engages an adviser with a view to ensuring their wealth declines. Investment performance inevitably counts for a great deal.
Yet research has repeatedly highlighted the enormous importance of other considerations. By way of illustration, take the findings of Royal London’s annual Meaning of Value reports.
Drawing on surveys of hundreds of consumers, these analyses aim to uncover “what clients genuinely care about”. Alongside financial returns, trust and good service have consistently emerged as key factors in respondents’ perceptions of the value they receive[1].
Naturally, there are numerous additional determinants. They include pricing, expertise, branding and communications. For the sake of argument, though, let us treat the above trio as the holy trinity of financial services provision.
As someone who works in the platform arena, I feel this brings us to another extremely important question: how can advisers and their clients leverage platforms to maximise these characteristics? In other words, what role can platforms play in promoting investment performance, trust and good service?
The answer is actually quite simple, yet it is rarely articulated. In recent years, for some reason, efforts to explain platforms’ appeal have increasingly come to overlook the fundamental attractions that lie at their heart.
Below is a once-over-lightly, back-to-basics run-down of those vital attributes. Irrespective of how obvious they might suddenly appear, it is useful to be reminded of how neatly they feed into what clients expect from their advisers – and what advisers, in turn, expect from platforms.
- Investment performance can stem from… ease of access
A key lesson of the past few years has been that diversification still matters. The notion of deriving endless outperformance from just a handful of assets – most notably the so-called “Magnificent Seven” US tech titans – has been blown out of the water by an uncertain, volatile investment environment.
There was a time when diversification was tough to achieve, even in the sphere of online investing. It often meant relying on a potentially disorienting assortment of providers, each with its own portal, password and processes.
The cutting-edge technology that underpins the best platforms has put an end to such complexity. It is now possible to hold numerous assets and accounts in one place and to maintain them under the same management and advice. Unparalleled accessibility can go hand in hand with both simplicity and, thanks to sensible diversification, the prospect of solid returns.
- Trust can stem from… transparency
Trust is the bedrock of any meaningful, lasting, mutually beneficial relationship. In the realm of financial services – where the most elementary goal is to look after a person’s money, grow it and then give it back – it is imperative, to say the very least.
The sort of financial journey that inspires trust involves no nasty surprises. Clients should not find themselves abruptly confronted by hidden commission, prohibitive exit penalties, baffling terms and conditions, illiquid assets and the like. Transparency is therefore crucial.
The best platforms are highly transparent. By satisfying the strictest regulatory standards, they bring clarity and confidence to investing. At Novia Global, for example, we meet the requirements of both the Financial Conduct Authority and Europe’s MiFID II framework.
- Good service can stem from… robustness
Especially in a world where precious few things seem predictable, there is much to be said for dependability and stability. As I have written previously, the best platforms can fill the void by demonstrating robustness – a firm foundation for good service.
Precisely what makes a platform robust? There are many potential sources, including the variety of products and services offered, expertise, experience, a focus on due diligence, continued innovation and a commitment to cost-effectiveness.
None of this is easily accomplished. Robustness is a profoundly resource-intensive ideal that can make huge demands on an organisation. But it is central to the quest to give advisers and their clients that they need – and, indeed, what they are fully entitled to get.
Linda Johnstone is Novia Global’s Head of Investment Proposition.
[1] See, for example, Royal London: The Meaning of Value, 2024 – https://adviser.royallondon.com/campaigns/people-powered/deliver-value-for-your-clients/explore-our-meaning-of-value-research/.
