The standard advice for investors during times of turmoil is to stay calm. Yet it would be quite wrong to infer that this means they should do absolutely nothing.
Linda Johnstone, Novia Global’s Head of Investment Proposition, shares her insights on why platforms can prove their worth.
There is a big difference, after all, between adopting a long-term view and burying your head in the sand. While the former can encourage a sensible outlook, the latter can lead to wilful ignorance.
As the crisis in the Middle East has reminded us, investors and advisers alike may at the very least wish to review portfolio positioning in the face of geopolitical and geoeconomic tumult. And this is where the infrastructure that facilitates investment decisions can prove its worth.
Take platforms. The true extent of their value might not be especially visible when markets are comparatively tranquil, but it can become all too apparent during heightened volatility and uncertainty.
In such circumstances, more than ever, stakeholders want attributes such as speed, ease of access, choice, flexibility and transparency. So how might a platform provider ensure qualities like these are to the fore?
The legacy issue
The first hurdle many platforms must overcome in rising to the challenge is legacy infrastructure. We can frame this problem by drawing parallels with the historical hodgepodge that can be found in almost every town or city.
Wander a few hundred yards from Novia Global’s offices in Bath, for example, and you will come across architecture from the Gothic, Elizabethan and Roman eras, among many others. This is all very charming, but a similar mishmash in the platform arena is altogether less beguiling.
Granted, the date range might be less dramatic. Yet the fact is that many platforms are underpinned – either in part or entirely – by technology from a bygone age, as a result of which their systems and processes are becoming ever less fit for purpose.
A popular “fix” is to implement stopgap solutions, as if old and new were able to coexist as happily as they do in Bath. Unfortunately, clashes and conflicts are among the likely outcomes in such cases.
All the evidence suggests the demands of keeping pace with technological advances are set to mount. Platforms can therefore hope to say abreast of the curve – or even ahead of it – only if they continue to invest and adapt.
The power of partnerships
Needless to say, investing and adapting can be both resource-intensive and expensive. Yet the reality is that stakeholders – with no little justification – expect nothing less.
Various studies, reports and surveys have underlined as much. For instance, 96% of advisers polled at a recent conference said they would like to better understand a platform’s capacity to integrate with other tech they use1.
A “make do and mend” approach is unlikely to achieve this goal. At best, it can somehow stave off a significant failure. At worst, it can accelerate the advent of disaster.
Equally, innovations that are rushed to market amid claims that they sensationally redefine the cutting edge may prove less than ideal. Many can turn out to be unproven and ill-conceived.
Partnerships increasingly mark the way forward for many providers. They can represent a potent, cost-effective means of bringing clarity and confidence to investment decisions – both in times of turbulence and during periods of relative serenity.
Operational excellence as a given
Platforms are sometimes perceived merely as an administrative enabler – a handy way of making investing easier. Fundamentally, of course, this is exactly what they are designed to do.
Yet making investing easier is itself far from simple. It requires operational excellence – not only when all seems well with the world but when stakeholders might have grounds to believe there is something to worry about.
Even allowing for the customary appeals to stay calm and remain focused on the future, pausing for thought has been a sensible course of action of late. It is likely that millions of investors and advisers have been checking exposures, adjusting weightings, seeking more diversification and generally reflecting on how to respond to global events.
Those who have been able to do so against a backdrop of solid, reliable and genuinely contemporary platform infrastructure may have found the task reasonably straightforward. Some might even have rather enjoyed it.
By stark contrast, those who have been forced to wrestle with fragile, erratic and outmoded platform infrastructure may have emerged from the experience even more stressed than they were before. Accordingly, they might well feel justified in taking their business elsewhere.
