The platform industry’s annual beano has been and gone once again. And amongst the usual suspects and the ever-lengthening category names (hard to type when you’re tweeting the results, are you listening Clive?) there were a couple of real stand-out results for me.
First, Scottish Widows took Best New Platform with mymoneyworks. As the judges commented (sort of), many are called but few are chosen, and of all those banging their gums about corporate platforms, Squids are the only ones to really come to market. I’ve seen a version of it and it’s mainly about communication and education rather than massive investment functionality and guess what? That suits most people.
In fact, in this important category 2 out of the 3 shortlisted target the mass affluent rather than the crowded HNW space. Aviva’s second swing at the platform market (disclosure: they’re a client of the lang cat) picks up criticism for not having offshore bonds, double-geared Guatemalan venture capital trusts or whatever, but it too is targeting this under-served area.
Whether these offerings can make money in this space remains to be seen. But it is interesting that later entrants seem less interested in scrapping for crumbs from the HNW table but instead are going for the space currently occupied by packaged insured business and the supermarkets. Is it time for platforms to start focussing their offering at a particular segment rather than being a catch-all? I think so.
But of course the big news was the giant-killing team at Nucleus, who scooped the big prize of the night (disclosure: they’re a past client of the lang cat). The tables from the big providers did a little harrumphing, but generally round the room people were delighted. A small explosion of happiness was reported in Vietnam where a certain vocal CEO was on holiday.
By my reckoning Nucleus have spent something like 1/18th of what the big guys have, and they still took the prize. So how did they do it? Here’s the lang cat 5-step guide to how to win Platform of the Year:
- ListenÂ – Most platforms say that their key users define their development schedule. Most platforms are not really telling the truth. Nucleus, due to their capital constraints, can-t put in massive functionality drops all the time, so they calibrate their developments to things their user base genuinely want.
- RespondÂ – Linked to point 1, Nucleus are scrupulous about selling in the benefits of each development they do, even if it’s just changing a drop-down menu to make it more intuitive. You know how M&S put boards up in their stores saying, you asked for xxx and here’s what we’ve done about it’? That’s how to get the credit you deserve for your developments.
- Don’t over-reachÂ – If your strategy is to get, control of the adviser desktop, you’ll fail. Advisers, especially the smart ones, are wise to this and the FSA are too. You don’t have to provide every tool, bell and whistle. Concentrate on doing the basics well, and try to link to the adviser’s toolset / back office of choice. Nucleus are vocal about accepting their place in the (horrible term) value chain and aren’t trying to set up camp all over the place. Their user base rewards them for it.
- Remember your friendsÂ – I spoke to an IFA recently who is a major user of a big platform, with tens of millions sat on it. His flows to the platform have slowed, mainly because he’s put most of it on there already. Guess what? He hasn’t heard from his platform for some considerable time. Platforms are an AUA game, not just an inflow game. The community aspect of Nucleus is something others have tried to replicate and failed. Yes, there’s the shareholding issue, but I think it goes beyond that. Of course, you also have to be willing to do points 1 and 2.
- FocusÂ – Monoline providers like Nucleus of course only have one thing to worry about. But even composites can get similar results by concentrating on two words, focus and specialism. I think Nucleus have something like 3 salespeople (might be more now). There are platforms out there with 100 or so guys running round in nice Audi A5s who can’t get the same traction. That’s nothing to do with proposition and everything to do with really, really knowing your market. Back that with good implementation and adviser support (away from Nucleus, Transact are still the kings of this) and you will build your reputation.
So there you have it. The time for competitive differentiation (that’s easy for me to say) on platform features is probably past now. The winners, at least in the intermediated space, will, I think, be those who pick a segment, and concentrate on it ruthlessly. Boring stuff like useability, integration with third party tools and operational excellence will be what makes a real difference for the next few years.
Or maybe not. What do you think?