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The Lang Cat: Platforms are dead

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Platforms are “dead” in their current form, according to a state of the market report by consultancy The Lang Cat due to be published later today.

The report says the platform market is “struggling” and that Legal & General’s failure to secure a buyer for Cofunds raises questions about the sector as a whole.

The Lang Cat consultancy director Mike Barrett says: “Those questions are clearly being asked in Paris, as Axa Wealth also reportedly gets put on the market.

“Quite simply, we have a (relatively) small market, dozens of suppliers, fragmented distribution and considerable downward price pressure.

“There are wins to be had: profits to be made, but total domination of the sort that Axa and L&G want and expect just isn’t there.

“We’re convinced, then, that platforms – at least in the guise that we’ve known them for the last decade and a half – are dead.”

The report argues platforms need to evolve rapidly to ensure their survival.

Barrett says: “There is an urgent need to improve back office systems and processes to drive costs out of the business.

“Equally urgent is the need to improve adviser and customer online propositions. In several cases a platform’s customer portal requires you to use a PC with Internet Explorer, and even then you can only get a valuation.

“In a digital world customers expect much more and a number of direct platforms are starting to address this.”

The report also says platforms are not as well set up to support the pension freedoms as they claim.

It says: “In too many cases it’s far, far too manual, especially if you’re mixing up drawdown and withdrawals from Isa or GIA capital, for example.

“We’ve seen clients ending up with multiple small-ish payments each month, on different days of the month, some needing to be triggered by the adviser each time. That doesn’t sound like 2015 to us.”

It adds that providers are too focused on developing new products, and not enough on improving customers’ ability to manage their retirement income via a platform.

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. Wow – from The Lang Cat. Am I the only one never to have heard of these “experts”?

  2. Nah. I’ve never heard of them either. Sound like jokers to me.

  3. For both advisers and DIY investors platforms are essential. Who want’s to go back to the old days when you could only invest in an ISA with one fund manager. For an portfolio valuation this would revert to the pain it was before platforms existed.

    I really don’t know what these experts propose instead, but reverting to the old ways is an horrific prospect. Personally when I was an adviser and now managing my own investments I just couldn’t/can’t manage without platforms (I still use two).

  4. Mike agree with your comments that some platforms have to change look forward to having an interesting conversation with you on the topic at the Mindful of Innovation events on the 3rd November Look forward to reading the report or summary of your findings prior to that date

  5. Once again the Lang Cat is spot on – several parent companies of provider platforms are looking to exit the UK, the big investment companies are buying up “robo advisers” here and in the US, the cost of providing advice for many IFA firms is too high and clients can access all type of information immediately and on line in so many parts of their lives. Advisers need the platforms and other supporting technologies to develop, be able to integrate, and support them more – and I think that’s what the guys are saying. Harry’s post illustrates how key platforms are to advisory businesses now – but an integrated client proposition from a profitable business is the kind of support needed.

  6. The small and uneconomic will go, however sophisticated they are. The big will survive. When I was 18 I bought a Betamax VCR because it was technologically superior to VHS. I learned that market share and dominance was what mattered. I’ve made it a mantra to ‘never buy Betamax’ ever since. I’ve been using Fundsnetwork since I launched West Riding in 2004 and never regretted it. Also use ATS, OMW and Transact. I generally try to avoid anything that relies on a life company keeping its promises.

  7. @ Paul Barnard – no, Mark Polson hasn’t heard of them either….

  8. Paul Barnard
    Yes you are

  9. Polson sticks his head out of the window and shouts “DON’T YOU KNOW WHO I AM????”

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