'Platforms' to be fought out in front office

Some extensive discussion and articles over here in the UK about that the platform battle will be fought out in the front office. Sorry, werent platforms about holding investments for investors...doesnt seem like that anymore...

I think what we are seeing is the difference in the concept of a 'platform' to hold investments, trade, execute, settle etc, and the 'platform proposition'. It appears that there is going to become a distinct difference, and with such, a difference in the economics and dynamics associated with each also.

It is likely that the business of 'platforms' are high volume scale game operations of which there are probably going to be handful of viable offers in each geography. But the business of 'platform propositions' is likely to be very different. With the ability to outsource back office functions to some of the scale players, yes it sounds like differentiation is very much going to be in the front office. But let's examine this more closely...

Is it really going to be the case that each 'platform proposition' will develop all the componentry to provide a complete front office ? Isn't that going to be expensive ? Isn't that going to take time ? Hang on - isn't that the business of technology vendors ?

If we look at this in a traditional sense, we could see that technology vendors and 'platform propositions' are perhaps going to converge. However, I think if we look at this more closely in a more Web 3.0 context, perhaps we can see some distinct seperations.

In this Web 3.0 context, 'platform propositions' are the businesses that put together front office componentry, fill it with data, integrate it with their back office providers, and make it look and feel how they want to to suit their target market. But, in order to do this quicker and keep it up to date, they can (and probably must, in order to be economic and keep up to date with innovations) use outsource third party front office 'componentry' from proposition enabling technoogy firms (such as Financial Simplicity). With such an approach, a 'platform proposition' can put together a highly functional, interactive and contempory proposition with model portfolios, managed accounts, portfolio tools etc together very very quickly. I think we are talking weeks -- not months or years.

Which then begs the question, why wouldn't every wealth management firm with any size then create its own 'platform proposition' ? Perhaps it will, which then poses the question what is the market for independent 'platform propositions' ? Are they just going to service the wealth managers and IFAs not big enough to create their own 'platform proposition'? And at what cost?

SelfWealth, a brand new solution to an age old problem.

A great example of the new thinking required to run a sustainable, competitive wealth management business in our enduring environment of change and uncertainty.

For the first time in Australia, investors can now access an online tool, which compares their portfolio’s performance against those of peers, professionals and the market for one low flat monthly subscription.

Read full article: http://www.financialstandard.com.au/news/view/23482918

Next-gen platforms cater for wealth management renaissance

Financial Simplicity offers views on the implications for investors of rapid technology change.

http://www.financialstandard.com.au/news/view/23437492

Whither the US election... And Europe... And China?

With the US election fast approaching on November 6, election fever has gripped the US. However, while the outcome is doubtless very important to the US electorate, global markets remain as focussed, if not more so, on the continuing challenges in Europe, not to mention the slowing economy in China.

As Australian equities fall driving by continued concern over China’s economic slowdown (and its territory dispute with Japan is not helping), global banks are trying to force reflation and are engaged in lowering interest rates. The International Monetary Fund has now cut its global GDP forecast to 3.3% for 2012 and 3.6% for 2013.

How will this affect investor behaviour? Mainstream investors are more cautious than ever. Despite common challenges, every investor thinks his or her situation is just a little bit different to that of the next person. While continued market uncertainty makes it more important than ever to have complete transparency and immediate control over investment portfolio holdings, it is just as important to reinforce an investor's belief that he or she is indeed unique. Today, more so than ever, that concept of uniqueness is what will attract and retain long-term wealth management clients in a world beset by short-termism.

Attached below is a White Paper written by Financial Simplicity on how mass customisation can serve the needs of the Unique Investor in any market.

http://www.financialsimplicity.com.au/images/whitepapers/mass_customisation_and_the_unique_investor.pdf

Yes, the rich really are different…

Really interesting article in Canada’s Globe and Mail newspaper considering attitudes that differentiate the highly affluent from those who are not.

But the lessons and thought patterns presented in this article are not just the domain of the rich right now. More and more wealth clients – high net worth and mass affluent alike – exhibit rich behaviour (specifically, they are “more inclined to assume they are in control” and tend to “individualistic behaviour”). More to the point, they expect their wealth managers to have a complementary mindset and, critically for wealth management operations, this implies a means of facilitating transparent, immediate investment control.

http://www.theglobeandmail.com/life/yes-the-rich-really-are-different-from-the-rest-of-us/article4557430/

Custom-tailoring begins at the dinner table.

We’ve all grown used to being able to get any kind of coffee we want in Starbucks, so much choice that I’ve literally seen people freeze up when it comes to ordering. Yesterday, however, I realized that customer tailoring had even permeated the product-dominant world of McDonalds. All three people ahead of me special ordered – in one case even asking for three choices of toppings (in separate containers) for a basic ice cream sundae. Staff were happy to comply. They didn’t even raise an eyebrow. Special requests are expected, even in a business which depends on adhering to mass production and limited choice.

If customers expect to customise their food choices in a fast-food restaurant (and not pay extra), how much more will they expect when it comes to managing their money? The culture that is driving the demand for custom-tailored, highly transparent and lower-cost portfolio management begins with the most basic of human requirements.

The rise of consumer dominance is no longer a trend. The consumer - whether drawn from retail, mass affluent or high net worth segments - is dominant. Period.

An interesting recent perspective, emphasising current critical characteristics of successful wealth management firms, is included in the brief article attached.

http://luxuryinstitute.com/blog/?tag=rockefeller-wealth-management

Trends in the New World

Whenever I see a list of key trends in wealth management (and there are many trends, as well as many lists…), the same core imperatives stand out: increased transparency, increased consumer control, uncertain markets, greater value for money…

However, it's not the trend itself that's important so much as what you do with it that counts. Collaborative infrastructure allows the critical business drivers underlying these trends to be deployed in a way that's most appropriate for the clients of a wealth management practice.

If you're looking for effective ways to capitalise on trends (and you should be) make sure you pose a critical question: does the proposed solution support my business or control it? Truly collaborative infrastructure allows your business to evolve with the changing needs of your clients.

The new world demands that we are not paramount or superior to our customers. It’s all about them: Truly sustainable business management practices are those that allow the customer to collaborate in genuine partnership. That is the trend that integrates the rest.