A few months ago, I glibly tweeted asking for examples of replatforming projects that advisers believed had gone well.
I wasn’t exactly inundated with positive responses.
Even some of the most astute market watchers failed to predict the phenomenal growth of advised assets held on platforms over the past decade. With the added volume and complexity of platform operations, it was inevitable that they would have to modernise their technology infrastructure or risk the money going into a black hole.
The unfortunate corollary of this is that traditional life companies have been forced into running highly technical digital projects they are uniquely unsuited to managing.
Aviva has become the latest casualty of this process. We have received a great number of letters, emails and phone calls from understandably frustrated IFAs trying to facilitate some pretty basic transactions for clients and struggling. Add to this the frequent passing mentions of feeling in the dark that filter into my everyday conversations with advisers and the picture for Aviva could look pretty bleak.
I have plenty of sympathy for Aviva here. It, and advisers, are not well served at all by an oligopolistic market in underlying technology support for retail investment platforms. The market is dominated by just four major players: Bravura, IFDS, FNZ and GBST. Aviva happens to be moving from Bravura to FNZ.
Neither has any incentive to make the transition a smooth one; the longer it takes, the more they can earn in fees and the more they can irritate their rivals. Not even the likes of Old Mutual and St James’s Place have been able to keep their partners to budget.
Aviva will certainly take a reputational hit from this experience, but it is unlikely that it will trigger a mass exodus of assets.
Firstly, it has a decent track record of adviser and client service. It is also reasonably priced in an environment where value savings for end investors should be coming from all parts of the chain.
But, more importantly, Aviva is fortunate that it isn’t easier to simply lift and shift off the platform and on to a competitor. If platform switches really were that easy, we would have seen flight from all of the other players in the market that have had replatforming glitches or expressed concerns about how much everything is going to cost them.
Though painful, all of these technology upgrades really need to happen now, not later. What would help minimise the pain for advisers and their clients in future would be if the FCA really takes its work on platform competition seriously, and ensured that both providers and technology companies were really pushing themselves to make the best of a painful situation.
Justin Cash is editor of Money Marketing – follow him on Twitter @Justin_Cash_1