Difference and Differentiation: What next for investment platforms? - Paper - Page 13
Who is he?
(and what is he to you)?
Over the years there has been an imbalance or assumed primacy of relationship
across the retail investment sector that many providers have struggled to
properly understand, in part due to the slightly uneasy relationship between
adviser and provider, and notions of client ownership.
There have been many instances where advisers
have bemoaned providers for ‘stealing clients’
when the provider has communicated directly to
customers about a product, has actively taken steps
into the world of advice, or launched/acquired a D2C
proposition. Each party considers themselves the
centre of the universe; advisers have a relationship
with a client about goals, ATR, tax wrappers,
investment choices, and suitability; providers have a
relationship with a client about money in, money out,
product administration, and keeping their assets away
from harm. With the predominant business model
being based on taking a slice of what the client has,
then keeping hold of that customer becomes ever
more important.
There is an argument that the world is shifting from a
product-centric society to a service-centric one; where
organisations become ‘value facilitators’ rather than
‘value producers’ in that they will not only supply the
product but also facilitate and offer value in its use.
This ‘as-a-service’ value proposition may drive the
next phase of innovation in the industry.
For a market where some participants are trying to
cover all the bases, vertically integrated from advice
to asset, or with advised and direct propositions, how
might our platform categorisations respond to this?
Advice as an Asset…
The cost of delivering advice makes it a service
typically taken up by the wealthier proportion
of society; only 3.7m people, or 6% of the adult
population, have an ongoing advice relationship,
according to FCA figures1. Research by Royal London2
suggests there are 9.4m people who are not advised
but are open to advice. With advice in its current
form, we could see this separation persisting into the
future, however, regulatory reforms and technology
improvements can change that.
M&G have been well publicised in their move
towards hybrid advice in their work with both Ignition
and Moneyfarm, and the origins of robo-advice
lend themselves to the idea of an asset manager
supporting individuals in finding the right investment.
Fidelity has both an advice arm, and a strong direct
book, as do Abrdn, so delivering efficiency into
those advice businesses through digitisation and
hybrid advice tooling, combined with a restricted
advice proposition seems sensible. However, as has
been seen with Vanguard, getting that proposition
right is essential and there is significant work in
brand positioning needed to draw in new customer
segments and reach a viable scaled advice business.
That’s Life…
The future strength of our life company platforms
could lie in their parents’ credentials; the
differentiation may come from more innovative
products, or bringing older products to a new market,
as we see with moves to bring with-profits and
smoothed funds onto platform by both M&G and LV=.
Application of experience in the world of insured and
blended funds could bring an evolution to MPS and
CIP propositions.
With a growing savings imperative coming from autoenrolment, the life company platforms could also be
well positioned to build on the workplace connection;
having a slick, automated, transfer service to
consolidate disparate pensions ready for retirement
would be of interest to both advisers and employees
approaching retirement. Some sort of dashboard
where you can see all your pensions is probably a
good place to start.
1
https://www.fca.org.uk/data/retail-intermediary-market-2021
2
https://adviser.royallondon.com/globalassets/docs/adviser/misc/br4pd0007-exploring-the-advice-gap-research-report.pdf
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