For Brett Williams, the irony facing wealth managers and advisers is that the opportunities have never been bigger but neither have the challenges.
Williams, former chief executive of Cofunds and the Selestia platform, has just marked his first year as UK managing director of SEI Wealth Platform. And he is amazed at the amount of regulatory change that has recently impacted on financial services: everything from the RDR and regulation around the suitability of platform-related investment advice, to the upcoming pension freedoms.
“There has never been a greater need for advice but it is risky and challenging to provide that advice. Proving ongoing suitability when the rules are changing is a challenge,” he says.
For example, when advising someone to buy an annuity, evidence of suitability is required only once, says Williams. However, when the pension freedoms take effect in April more people will be advised on drawdown and creating investment portfolios, so suitability requirements will be ongoing.
“You need systems to help you do that. But it’s far harder for institutions to keep up from a technology perspective with all the changes going on,” he says.
Williams points out that what seems like a relatively minor change, such as an increase in the Isa limit, can cause problems where current systems cannot deal with it.
“If the Isa limit incrases but a system can’t do it, it needs to change and that costs money,” he says. “Technology doesn’t come cheap; it’s hard to do it on a shoestring. But you have to see it as an asset.”
Some firms are resigned to trundling on with old technology that just about works but Williams feels that somewhere along the line there will be a tipping point where doing this is no longer viable.
“There are opportunities to outsource technology to someone who does that as a business, so you can focus on your own strengths,” he says.
For Williams, outsourcing technology enables firms to focus on client relationships and taking their propositions to the market.
“It means you don’t get involved in keeping it up to date and fit for purpose from a regulatory viewpoint,” he says. “The big institutions have thought about outsourcing technology and some have done it with some success. Some don’t do it because they think the risk of doing something is greater than doing nothing. But I think the risk of doing nothing is greater than doing something and you don’t need to outsource everything you do,” he says.
For Williams, the problems caused by continuing with old technology are illustrated by the retail platforms that dominated the market back in his Selestia days.
“The challenge with old technology built before the RDR and before pension bank accounts is that it simply will not work going forward. The platform world has moved on. Cofunds, Skandia [now Old Mutual Wealth] and Fidelity were major platforms around 2000 and are all looking to re-platform. They’ve all got their own legacies but they are having to cope with the world as it is now. That is a big challenge,” he says.
Williams says SEI operates in a different market. “We are not really a retail platform. We are moving more and more towards larger IFAs, banks and private client institutions that are using big engines that sit behind their own front-end systems. Some of them want to use the power of their own brand and that sits comfortably with us as we don’t want to be producers,” he says.
Williams joined financial services as a graduate trainee in the early 1980s with Hambro Life, which later became Allied Dunbar. “Hambro Life was a young, dynamic, energetic business and that appealed to me. If you were keen you weren’t held back by your age. I learnt early on that nobody’s perfect but if you work hard you can achieve a lot. That was the strength there in the business: you were allowed to have flaws but if you were focused and worked hard, you could be successful,” he says.
That lesson was put to good use when Williams was launching Selestia in the late 1990s.
“Setting up Selestia was exhilarating and hair-raising on occasions. I loved it. I started off with a blank piece of paper and thought: what is this going to be? People called it a fund supermarket or a platform but that wasn’t in my head. I was thinking: what should a business dealing with investment look like? It should have scale through technology, not through people; it should have a relationship-driven model rather than transactional model. The product was the investment solution, not a wrapper.”
Williams is full of praise for Old Mutual as the backer of Selestia but when Old Mutual bought Skandia in 2006 it signalled the beginning of the end for the Selestia brand. In hindsight this is something Williams would do differently.
“I’d have fought harder to keep Selestia separate when it was migrated into Skandia. We were managing a mix of product-driven business at Skandia Life and trying to mix tools of Selestia and Skandia Multifunds which were platform driven businesses. It would be interesting to see how we’d have gone if we’d left Selestia alone,” he says.
A spell as chief executive at Cofunds followed between 2009 and 2010. “The appeal of Cofunds was that there wasn’t any migration to do. It was an independent platform with six shareholders and could focus on being a platform rather than changing the business,” says Williams.
“Cofunds grew very fast, from £13bn to £27bn in 18 months. There was a lot of momentum but the shareholders had different timescales and ambitions for the business, so that held it back at the time. Some wanted to take a long-term view and others wanted to sell,” he says.
Looking ahead, Williams thinks that, from April, financial planning will be more prevalent as that is what people will be paying for. “Platforms will need to be able to buy and sell different assets, value them simply and report on them in a simple way,” he says.
What’s the best bit of advice you’ve received in your career?
Focus on your strengths and if your weakenss is not going to hold you back, ignore it.
What keeps you awake at night?
My daughters coming in late.
What has had the most significant impact on financial advice in the past year?
The end of compulsory annuities.
If I was put in charge of the FCA for a day I would…?
Give them the day off!
Any advice for new advisers?
It’s a fantastic opportunity. Never be afraid to change; always work hard and you’ll succeed.
2014-present, UK managing director, SEI Wealth Platform
2011-2013: Senior roles at Insynergy. Old Burlington Investments and LW² Private Equity Partnership
2009-2010: Chief executive, Cofunds
2007-2008 Chief executive, Skandia UK Business Unit
2006-2007: Chief executive, Selestia and Skandia Multifunds
2001-2006: Chief executive, Selestia
1998-2001: Sales and marketing director, J.Rothschild International
1993-1998: IFA sales director, M&G Group
1981-1993: Graduate trainee, broker consultant and branch manager, Hambro Life/Allied Dunbar