In a climate of persistent market uncertainty and negative headlines, Linda Johnstone, Head of Investment Proposition at Novia Global, explores how platforms can play a vital role in supporting financial advisers and their clients—offering not just technology, but stability, oversight and true peace of mind.
I shared some views with IFA Magazine readers earlier this year about the role advisers can play in reducing anxiety among investors. As the negative headlines continue to stack up, now seems a good time to discuss the role platforms can play in helping reduce anxiety among advisers and investors alike.
Your immediate reaction might be that advisers require no such assistance. After all, anyone who works in financial services should appreciate there is nothing to be gained from panicking in the face of market volatility.
For example, we all know it usually makes sense to remain calm, focus on the long term and stay invested. We all know trust and transparency are central to encouraging clients to adopt a rational view. We all know anxiety tends to be short-lived and even wholly unjustified.
Yet human nature means we often do feel uneasy. It would take a marked absence of emotion to soak up the bigger picture – tariffs, conflicts, unpopular governments, controversial policies, recession fears, all-round uncertainty – and not experience at least a twinge of apprehension.
We can perhaps safely assume, then, that even professionals need some sort of reassurance. If nothing else, given that concern can be strangely contagious, many advisers might secretly worry simply because their clients are worried.
Against this challenging backdrop, where do platforms enter the reckoning? In my opinion, their value lies in an ability to provide diversification, flexibility, oversight, structure and stability. Maybe above all, they can offer a measure of genuine robustness in a fragile world.
Why dazzling tech isn’t enough
Diversification and flexibility are obviously vital in an age when market direction appears to change by the day or even more frequently. As the turmoil of recent weeks has reminded us, clients are seldom handsomely rewarded for having all their investment eggs in one basket.
This is not to suggest, of course, that events should compel investors to repeatedly leap from a particular asset, theme, country or region and back again. Rather, the point is that it has always been prudent to mitigate risk by diversifying across a number of dimensions.
The best platforms can make this eminently straightforward. They can allow a variety of assets and accounts to be held in the same place, accessed via the same portal and come under the same advice and management.
It is imperative to note, though, that such benefits are truly useful only if they are backed by rigorous investment processes. There is a monumental difference between identifying, curating and seizing the brightest opportunities and merely thrashing out in all directions in the hope of getting lucky.
This is why oversight, structure and stability are crucial. Plenty of platforms use cutting-edge technology to open up the investment universe, but significantly fewer underpin such a facility with a razor-sharp focus on due diligence.
For instance, there is much to be said for operating an investment committee that scrutinises funds, enforces asset-allocation principles, approves DFMs and so on. Similarly, full regulatory compliance is a major plus. A combination of state-of-the-art tech and dedicated expertise can go a long way towards settling the nerves of advisers and investors.
Robustness and resources
Ultimately, advisers and their clients should be able to regard platforms as a source of efficiency and dependability. They have every right to suppose they will receive excellent, unwavering, highly effective service, with no unpleasant surprises.
In other words, by rising above the maelstrom of noise, doubts, ups and downs, platforms should instil confidence in the people who rely on them. To return to an earlier point: they should be robust.
Yet robustness is resource-intensive – heavily so. It makes huge demands on an organisation’s time, energy and acumen.
By way of illustration, consider the effort needed to meet ever-mounting regulations. By any standard, this is no idle undertaking. The necessary commitment is enormous.
The uncomfortable inference here is that not all platforms can be thought of as expressly geared towards lowering investors and advisers’ collective stress levels. It might be argued that those with proven records are best equipped to deliver the kind of resilience and solidity their stakeholders expect – and that those boasting little more than attention-grabbing tech are more likely to exacerbate users’ disquiet.
The lesson? Choose wisely – both for yourself and for your clients. As you weigh up the ever-expanding array of options in an increasingly crowded and competitive arena, always keep in mind that a platform should somehow offset all those negative headlines – not add to them.
Linda Johnstone is Novia Global’s Head of Investment Proposition.
