A platform can be for life not just retirement

With the average cost to an IFA for moving clients between platforms at £1,000, it makes sense to get clients in the right proposition from the start, writes Terry Huddart, technical communications manager at Nucleus.

Platforms in the UK have now been around for more or less 11 years. In that time, they have utilised technology to both save IFAs time and ultimately enhance the client proposition.

However, platforms have still not really moved beyond investment-related tools, products and services, with other parts of the financial needs spectrum remaining the preserve of more traditional providers.

Yet there is no doubt that this is changing and I think that 2012 will be a pivotal year when we really start to see this happen.

In terms of the product life cycle, platforms are still in their infancy and there are many ways that existing core technologies can be used to bring the same sort of efficiencies to other financial requirements.

Innovation

Any market is, of course, ultimately guided by the needs of its customers; whether it is responding directly to consumer demands or introducing innovation that customers didn’t themselves foresee (iPad, Facebook, Twitter) but then become routine.

One consumer need that is undoubtedly going to be a big driver of platform development is retirement. Platforms have for years been providing services that help advisers help their clients negotiate the retirement journey through features like pension drawdown and the ability to more easily aggregate and access income from other investments than via a traditional product provider.

Some ten million people in the UK are currently over 65 years old – and of course more over 65s are still working with increasingly-complex retirement needs. Recent projections are for 5.5 million more elderly people in 20 years’ time and the number will have nearly doubled to around 19 million by 2050.

As the baby boomers are now in or reaching retirement and longevity keeps increasing, there is no doubt that platforms (with a current average client age of about 58) will need to develop the kind of services that clients need in that particular life-stage.

This will include features like access to annuities, enhanced drawdown capabilities, income portfolios, enhanced income features for non-pension wrappers, estate planning and for the platform to generally act as a central ‘hub’ for managing the client’s income universe.