As fund supermarkets, also known as fund platforms, continue to be a popular way of buying funds for many investors and financial professionals – it’s important for asset managers to remember there's more to a platform than price alone.
For asset managers getting the most out of a fund platform means making sure your products are available to as many buyers as possible, at any one time.
While it may be true that the majority of people want the cheapest option in order to maximise their returns, complicated charging structures mean there is no guarantee that investors or advisers will always correctly identify the actual cheapest option.
Therefore, for those investors and advisers looking for the perfect place to buy funds, finding the best value platform is a somewhat more complicated process.
We’ve done some research on what makes a platform popular among advisers and investors and, alongside cost, here are some key features that make platforms stand out to the people who matter.
Range of funds
In addition to the lower charges that advisers and investors can benefit from, part of the appeal of a platform is the level of convenience they provide. Having products from multiple fund houses in one place dramatically simplifies the investment process for your clients, and for DIY investors.
The Financial Conduct Authority’s advice to wealth managers choosing platforms makes clear that the administration efficiencies of incorporating platforms into their business often limits them to using just one or a few platforms. This means that platforms with a wide, to all-encompassing, range of funds could have the edge over more limited options.
Therefore, you should consider how complete the selection of funds on offer is when thinking about distributing your funds via a given platform.
Quality of communication
So, seeing as the best platforms feature thousands of funds – one key consideration for users is the quality of communication a platform offers. And fund data is not the most easily conveyed message. In fact, the FCA have published recommendations for smarter customer communications recently, highlighting the poor quality of messaging within the industry.
According to the FCA’s discussion on customer communications:
“Communications play a fundamental role in helping consumers to make informed decisions. Effective, engaging information can be a key tool in promoting effective competition to supply products and services that consumers want.”
A recent article in the FT highlights the need for clear graphics to aid consumers' decision making capabilities. The article cites that some 31 per cent of retail investors feel that the fund industry is in the dark ages when it comes to presenting information, and that fund information is often impenetrable.
Advisers too will likely warm to a platform that offers portfolio comparison tools and reporting tools that make portfolio and fund data more presentable to their clients.
With this in mind, make sure platforms work hard to communicate your products effectively to both financial professionals and the less-seasoned DIY investor.
Data quality
While graphics and good-looking fund centers will go along way to making the most out of your data visually, a very real communication struggle for asset managers is data consistency – especially when dealing with third parties such as fund platforms, where the number of funds featured is very large and the data trail can become hard to follow.
With all the complexities and intricacies of data it is of no surprise that asset managers have gotten into trouble as a results of inaccurate data, or the mis-communication of data.
Data inconsistency can cause confusion among advisers and investors - and could potentially damage the already delicate balance of trust and transparency within the industry.
The regulation speaks for itself - section SYSC 4.1.1 of the FCA Handbook states that firms must have procedures in place to mitigate the risks associated with information processing.
Therefore, to make sure that you stay in control of your fund data and what's being published, it’s important you know that fund platforms use a reliable data source and that their data is consistent with yours.
Digital experience
As well as data consistency, an important factor in today’s competitive digital environment is user experience. Ultimately, if users do not find a platform straightforward to use it’s likely they won’t last long enough to buy your fund - so it’s important that platforms are easy and quick to navigate.
While we are on the subject of digital, it’s also worth thinking about whether a platform offers a service that displays well on mobile devices – for example, the launch of Fidelity’s mobile investment app shows the demand for on-the-go investment solutions.
Support services
Whilst platforms are largely execution only services for buying and selling funds – to help educate and aid more informed investment decisions, both investors and advisers could benefit from a good level of investment support being available on fund platforms.
It is worth considering your target customer - as most retail investors will likely be looking for a little direction. Comparisons, charting tools, and other clear graphics will help your funds stand out to shoppers and support them in making informed investment decisions, but it's also worth thinking about the news and research available to platform users.
Increasingly, the question now among individual investors and investment professionals is not whether to use a platform but which platform to use.
To make sure your products are given the best chance amongst the competition on fund platforms, it's important to make sure that platform users have a good digital experience, clear communication and accurate data all in one place.
Read:
Calling asset management marketers: 5 steps to attractive fund data
Finding the One: what to look for in a fund data management service