Seamless Platform Switching: How Automation is Revolutionising Asset Transfers
Despite the widespread adoption of the Origo Transfer Service and the Equisoft Transfer solution among platforms, fund managers, and pension providers, transferring assets remains a trepidation for many advice firms. According to the latest Origo Transfer Index, 88.7% of pension cash transfers were automated, with an average transfer time of 12.9 days. Simple transfers, such as SIPPs, GIAs, and ISAs, dominate these statistics, thanks to existing technology that automates most of the administrative burden. Platform-to-platform transfers are now predictable, but advisers still complain about delays when dealing with old-school life offices and assets that require manual authorization, held in trusts. These complex transfers can take several months because there is no universal approach with enforceable service levels.
The FCA is concerned about transfer times and actively encourages firms to improve their processes to avoid unreasonable delays. However, mandating and enforcing specific service standards for more complex assets is a non-starter because no single party controls the entire process. The STAR initiative sets standards for smoother transfers and is a significant step forward. This government-supported initiative aims to establish best practices and support Consumer Duty by removing barriers and reducing delays in the transfer process. Participation is voluntary, with firms rewarded with gold, silver, and bronze accreditation based on performance. Peer pressure combined with regulatory scrutiny is expected to drive adoption.
The Reluctance of Advisers
Despite the growth in automation and industry pressure, advisers remain hesitant to initiate asset transfers for three main reasons:
Perceived Effort: The effort required with no additional income.
Lack of Expertise: Advisers lack the knowledge and expertise of the transfer process's compliance regime.
Client Disturbance: The potential to disturb their clients.
Some established and challenger platforms have developed comprehensive end-to-end transfer solutions. Fidelity, Aviva, Parmenion, and SS&C Hubwise, spring to mind and offer solutions with the following features:
Cost-Free Service: The service is provided at no cost to firms.
Automated Transfer Lifecycle: A well-defined and proven transfer process, automated where possible, supported by robotics, workflows, and tracking reports.
Dedicated Transfer Teams: Capable, high-capacity transfer teams with single points of contact to support firms throughout the process.
Regulatory and Compliance Consultancy: Access to independent consultants for advice on transfer consent, suitability, and client communications.
Challenger platforms like P1, Fundment, and SECCL have or are building these capabilities to achieve their no 1 goals of asset accumulation, scale, and profitability. Seamless and comprehensive transfer functionality will become the challenger's killer app.
The Path to Efficient Asset Transfers
The following diagram shows the end-to-end transfer process covering Prepare, Activate, and Complete. Those readers familiar with Scaled Agile will spot that we have used the SAFe Implementation Framework as a template to build a ten-step summary of a well-trodden path. The steps that sometimes don’t get the attention they deserve are:
Step 4 Transfer Plan: Develop a well-defined, quantified, and measurable transfer plan.
Step 5 Adviser Coaching: Create storyboards and coach advisers in client communications to turn potential client disturbance into an opportunity for enhanced engagement. This is the contracting stage, and if done well, will be the catalyst that primes the asset transfer pump.
The transfer approach must be agnostic and support bulk (think one-off migration), batch (distinct campaigns run as mini-projects), and client-by-client transfers done at review time. In most scenarios, a mix of all three will be used with automation, adding the most value in reducing the adviser burden for bulk and batch transfers.
The Future of Asset Transfers
Regulatory pressure, industry collaboration to develop best practices, automation, and end-to-end workbenches are transforming asset transfers into streamlined, industrial-strength processes, but there are not enough case studies to build confidence and accelerate asset transfers. SS&C Hubwise are hosting a breakfast briefing on June 26th, featuring case studies from partner advice firms highlighting successful asset transfer approaches, best practices, and lessons learned. Asset transfers will accelerate as confidence grows, leading to a land grab. Legacy platform providers that cannot compete due to outdated technology and high operational costs will face increased outflows, threatening their ongoing survival. Even old-school life offices will not be immune.
Please contact us if you want to learn more about transfer automation or the key requirements and design elements of a transfer workbench.