Over a decade ago, the United Kingdom saw the implementation of the Retail Distribution Review (RDR), to improve transparency in the investment industry. This was to help consumers access clearly priced financial advice and investments.
Now, South Africa’s long-awaited RDR legislation, with broadly similar ambitions, is on the horizon. As a result, financial advisers, wealth managers and investment providers are going to need to refine their business models and client propositions.
According to Carolyn Erasmus, South Africa’s Country Head at fintech provider Bravura Solutions, the future of financial platforms depends on their ability to respond to market shifts. She believes successful progress in the coming years will depend on a more open and nimble development approach that has characterised platform evolution to date.
“Although the ground is shifting beneath our feet, there are a number of practical things financial service providers and investment platforms can do to ensure their business not only survives the upcoming competitive threats, legislative changes and consumer demands, but also prospers and thrives,” says Erasmus.
Bravura Solutions, in collaboration with NextWealth and The Collaborative Exchange, recently released a white paper, which aims to help usher financial advisers into a post-RDR future by analysing the lessons learned from RDR implementation in the UK and how this translates to the South African market.
To create a future-fit and successful platform, the research outlined five ways in which companies should rearrange their priorities:
1. Cost vs opportunities
Look for opportunities to realise cost savings and address the need for innovation cost-effectively to embrace new opportunities beyond just keeping pace with regulatory requirements.
2. Embrace the adviser ecosystem
To get the most value out of these systems, it is critical to integrate with the adviser ecosystem, particularly when it comes to research and back-office tools.
3. Focus on the future value
Identify their role in the value chain of the future and support advisers in running their businesses more effectively.
4. Let data lead direction
Customise reporting and data feeds, to support varying business models of financial advice firms. The shift to mass-customisation is finally reaching investment platforms.
5. Less is more
It is too easy to overcomplicate operations with platforms and processes that only seek to deter the client experience. It is usually far more effective to simplify and modernise your environments to streamline objectives and enhance the customer experience.
“Platforms need resilient, flexible and nimble architecture to meet immediate and ongoing regulatory change if they want to deliver on consumer-focused innovation. An ever-changing, ever-evolving market demands it,” concludes Erasmus.
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