A hectic week looking at lots of different ‘flavours’ of platforms. Monday took me to the Succession members conference and they put on a good show.
Arguably most interesting was the way in which CEO Simon Chamberlain described what most would see as an IFA business – he called it a ‘fund management’ business.
We think we will see a lot more activity in the buying and selling of advisory business over the coming three years – and platforms and IFA firms adding fund management capability to their bows is also on the cards. On this point, the change of name from Skandia to Old Mutual Wealth is – I think – indicative of a global trend for platforms and fund managers to move closer together.
I will be interested to see whether this change goes deeper than just a name change – will the platform business start to use its internal fund manager capability more?
The FSA’s Rory Percival also spoke at the Succession event and reiterated five things advisers need to be considering when thinking about platforms: keeping the customer at the heart of the business and decisions, maintaining individual suitability in any recommendations, remaining aware of the inducement rules, being up to date with the new adviser charging rules and finally being aware of any impact that platform use might have on the independence tag. There is a simple 4-page factsheet on this here.
Looking to the future and the role of the FCA, there was a hint that the regulator would be focusing more on the mechanics of how IFAs run their businesses.
Tuesday turned my affections to the changing non-advised platform market. Sharing ideas over lunch with three brainy people at the helm of some of the most exciting new developments, customer acquisition costs were at the heart of the discussion.
With costs ranging from £50 to £400 from those we have interviewed, customer acquisition, brand and security were returned to time and time again as the key success factors. With low account sizes and shrinking revenue bps projected in the future, you can see why customer acquisition costs will be a major focus of our research over next few months. Back of a fag packet stuff. If it costs £300 to acquire a customer, the average account size is £10,000 and your revenue is 25bps – well, that is very bad news.
Wednesday got slightly derailed by two texts arriving within an hour of each other telling me about a case of nits in the Nursery. And a case of nits in Reception. Not one week into school life!! Arrgh. One sign of a good platform is its technical support and I thank Fidelity’s Klare Baldwin for the tip about Nitty Gritty. Actually we were principally discussing David White’s departure from FundsNetwork – we wish him really well for the future.
Later that morning, a call from Aviva informed me that they have hit the £1bn mark. Slowly slowly catchy monkey.
I think that what happens to the life companies – and how successful they are at managing both direct customers, IFAs and corporate clients – is one of the single biggest factors in what our landscape will look like over the next three years.
Will the much heralded transition of pensions assets from life co.s to platforms materialise? A focus on replacement business and suitability from the regulator has cooled ardour in some camps.
Progress has certainly slowed over the last few months whilst D2C Sipps boom. And here is the Big Question. I think there is about a two million gap between the numbers of customers paying some sort of investment product commission and those customers who identify as IFA customers and are receiving a good, ongoing service.
How long will it take for the neglected two million to realise what has been going on – and once they do, where will they go? We’re forming our views – and would love to hear from you.
Thursday’s child was full of (Adrian) Grace and I spoke at Aegon’s workplace savings platform launch. It is rare to see true innovation in the platform market and I think this single platform which can cater for both workplace savings and at-retirement needs is quite smart.
Worth a look – I think there are opportunities here for IFAs. Anyone interested in this market is welcome to join us at our launch breakfast in London on Thu 27th September as we publish our first imaginatively named Workplace Savings Platform Guide. Written in conjunction with my favourite kitty, the lang cat’s Mark Polson, it will bring you up to speed with this market which we think will hit £1bn by year end.
And now it’s Friday and nothing at all interesting has happened. So I’m off to show my face at the school gate then I’m taking Hamish scooter shopping. Bribery to get us through the exhausting first week of school.
Have a good weekend all.
Holly Mackay is managing director of The Platforum