While there are many challenges investment platforms are forced to navigate, the biggest is the pressure to offer competitive prices and offer good value proposition to investors at the same time.
This competition stems from “non-traditional” competitors who are price-makers in asset management rather than investment administration. Although there is pressure to lower fees, the cost of servicing investors has gone up tremendously.
The bad news, however, is that this trend of lowering fees is expected to continue into the future as more and more companies are introducing fee aggregation. Fee aggregation is when an investor with multiple accounts is charged a fee based on his/her entire portfolio rather than each account priced separately.
As margins continue to fall in the industry, investors will get more services and pay less for them, so investment platforms are now looking for cost effective solutions, the “revolutionary breakthrough”. Now, many investment platforms are looking at the adoption of technology to assist in this regard.
Even in this challenging environment, there is still scope for growth as the world’s wealth continues to grow. Most businesses should cut out inefficiencies and come up with cost effective operational models that are also relevant to the targeted investor.
Fhumi is a head of technical marketing, responsible for explaining complex investment product features through clear and engaging communication to financial advisers and clients. She holds a BSc in actuarial science and has spent her career in the financial services industry assuming various senior positions. With a love for analysing and interpreting data, Fhumi aims to unlock revenue and efficiency opportunities.