Stepping up to the plate

The term “fund platform” is widely used in the asset management industry, but without common agreement about what it does. In simple terms, a platform is often assumed to be an avenue through which an investor can purchase investments, hold those investments, get information on their performance and sell them when required. For the investor, their route to market may be to purchase investments directly from a direct-to-customer (D2C) platform, or to purchase on an “advised” basis using a distribution intermediary that has a business-to-business (B2B) relationship with the platform operator.

In this sense, the investment platform provides a transactional service linking product manufacturer, distributor and investor. Investors are seeking access to a diversified, strongly performing product range with expectation of transparency, liquidity, simplicity (“ease of understanding”) and affordability. The product manufacturer is typically seeking space on the focus list of wealth management platforms delivering efficient, low-cost access for their products to a wide community of distributor (via a B2B platform) or investor customers. And the distributor is seeking to provide a transactional bridge between manufacturer (e.g. an asset management firm) and the end investor.

But to make these relationships work, the services required of a fund platform may extend well beyond the sales function – the task of providing execution of subscription and redemption orders, access (in some markets) to tax-efficient wrappers and provision of basic safekeeping services.

Alongside this sales component, key parties to the fund transaction may require a wider range of services – including distribution support functions (e.g. managing distributor agreements, rebate calculation and processing), support with compliance reporting, communicating data on distributor sales, access to product information and fund documentation through a single point of access, and availability of a powerful, but easy-to-use, set of performance reporting and portfolio monitoring tools.

Our experience is that market participants have different expectations of what a fund platform must deliver, depending on their position in the distribution supply chain, where they are located, and how they like to structure their business. This survey looks more closely at the services offered by fund platforms, what they do well and how they can improve their delivery to different client types. It also evaluates respondents’ views on how the distribution supply chain will evolve in times ahead.

Platforms and their services
The survey sought to clarify what respondents understand by the term “fund platform” (fig 1). Some view a platform predominantly as a sales function for investment fund products, supporting either an asset manager’s proprietary product suite (25%) or a broader range of third-party products from multiple manufacturers (10%).

However, the largest group of respondents (52%) said that a fund platform represents an “online service offering order routing, fund settlement and distribution support”. The overarching message is that the majority of respondents across this global survey regard a fund platform to be more than a sales operation, embracing a broader suite of services that include order management and execution services, fund settlement and asset servicing, distribution support and communication of data relating to the customer base and distribution supply chain (for example, to support compliance reporting requirements and/or to facilitate commercial analysis of distributor and sales team performance).

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