Phased Implementation Eases Long Transition to Platform Consolidation

Phased Implementation Eases Long Transition to Platform Consolidation
Firms should plan consolidated platform projects in stages to build advisor support

March 2019, Boston—Major transitions in the managed account space take years. Considering that 65% of managed account sponsors believe that building a unified advisory platform (UAP) will take more than two years, Cerulli Associates, a global research and consulting firm, suggests that this significant migration can be implemented in stages to build advisor support for the evolving platform.

Most managed account sponsors spend considerable time developing a consolidated managed account platform because of the complicated and protracted technology efforts involved. “A wealth management platform sits on a technology architecture of servers, mainframes, and software programs that must be redesigned to accommodate the new way of doing business,” explains Tom O’Shea, a director at Cerulli. “Building this platform requires new hardware, new software, and a team of technologists to develop and roll out the integration.”

As important as technology is to a consolidated platform, executives recognize that there are other critical, nontechnological features of a UAP that offer advisors efficiency gains. Nearly three-quarters of managed account executives rate “a single technology portal with a single sign-on” as very important, yet a single investment contract that covers all programs rated slightly higher, with 78% of respondents identifying it as very important.

“Executives at firms that have already migrated their advisory accounts on a UAP also express the importance of simplifying paperwork, including investment contracts, proposals, brokerage applications, and disclosures,” adds O’Shea. “One of the biggest challenges sponsors need to consider when undertaking repapering is asking clients to sign new advisory agreements.” Executives at sponsor firms uniformly identify this as a major obstacle.

“Considering the long lead time of technology projects and the challenge of client repapering, executives at managed account sponsors should develop a consolidated platform in phases and engage advisors in quick wins that will motivate them to embrace the UAP concept,” says O’Shea. “Simplifying the contracts and brokerage applications associated with managed accounts and streamlining the operational support of advisors and clients are important steps a firm can take to attract advisors to their program.”

The 1Q 2019 issue of The Cerulli Edge—Managed Accounts Edition explores how consolidated platforms, especially when built in stages, make life easier for advisors and clients and help to streamline compliance requirements for managed account sponsors.

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