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The Perfect Partner

Much has been made of the fragile state of the platform sector but Praemium is predicting a step change with the ever-wider adoption of SMA technology.  

More and more international adviser businesses are following in the foot- steps of their UK, US and Australian counterparts by embracing platforms as an efficient means to manage and deliver their investment propositions. 

With the number of platforms available in the international space increasing rapidly, the question is: which is the right one to sup- port your business? 

To complicate matters, much has recently been made of the fragile state of the sector – there are too many players, it lacks profit- ability, platforms are up for sale and struggling to find buyers – with alarmists and black hats sparing no ink to paint the picture of imminent demise for many firms in the industry, either by consolidation or out- right failure.


Best selection

So, how do you select a platform to use and how can you be certain it will be around to support your business in the future? 

Not all platforms are the same – there are transactional platforms, wrap platforms and now separately managed account (SMA) platforms. Some will support you in managing and delivering your investment proposition; others offer a truly integrated solution to support your whole business. 

Navigating the choices is complicated by the fact that most of the platforms are based on the software of just a few providers – many Australian. This makes plat- forms virtually indistinguishable from each other. But we believe that the adviser land- scape is poised for a step change and that an SMA platform is a strong solution for adviser firms seeking to transform their businesses. SMA technology is already a trillion-dollar market in the US and growing strongly in Australia, the UK and globally. It helps adviser businesses to adapt to the changing expectations of investors and the pressures of regulatory change, while creating operational efficiencies. 

SMA technology is a scalable, transparent and efficient way to run discretionary portfolios, and it is beneficial for investors and advisers alike. As it takes hold in the UK and international markets, we are confident SMA platforms will provide considerable competitive advantage to adviser businesses.


How it works

SMA technology efficiently applies model portfolios to a multitude of investor ac- counts. It compares weightings in the model portfolio against those in client accounts to establish the trades required to bring client accounts into line with the model; aggregates trades for each asset across all accounts; and automatically updates all individual investor accounts once trading is complete. 

It allows the managers to implement strategy changes across a number of client accounts simultaneously, reducing the administrative burden for the business and ensuring all clients in a model are treated equitably.


Benefits for advisers

Using an SMA platform means advisers do not need client permissions to make changes to a portfolio, which reduces the chances of missed investment opportunities. 

In addition, investment managers can manage portfolios dynamically as models ‘float’ with the market, eliminating the need for rebalancing to bring the investor back in line with the model – with an SMA platform, all investors in a model are always in line with it and with each other. 

SMA technology also minimises errors inherent in platforms that use manual processes and enables the delivery of actively managed portfolios for clients of any size.

Most importantly, the technology allows advisers to spend more time on financial planning and client relationships.


Benefits for clients

The benefits to clients are numerous. The technology means a client’s portfolio is al- ways invested in line with the model that they have selected. As all trades are aggregated, clients benefit from lower trading costs a single trade is placed and transaction costs are shared across all participating client portfolios. 

Clients will also find there is less paper- work and no need for contract notes. Advisers select the most appropriate model portfolio(s), and the investment manager and SMA technology will take care of the rest. 

So when looking for the right long-term, strategic platform partner, you should focus on some key components: will they support your strategy for your business, do they have good management, strong financial backing and, most importantly, do they have the right technology?

Rebecca Murphy Director of Sales & Marketing 


Sponsored article by Praemium 


Author: LifeTalk Admin (Bella)
Posted: Wednesday, December 07, 2016 | 10:37:38 AM

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