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Will life companies’ D2C experiment come undone?


Life companies attempting to break into the direct-to-consumer market and rival the dominance of Hargreaves Lansdown have a huge challenge ahead, say platform consultants.

This week Aviva became the latest insurer to launch a direct platform, powered by FNZ.

The platform will include an Isa, Sipp and general investment account and customers will be able to buy, sell and switch investments. Annuities can be bought direct but not through the new platform.

The company says while the new platform is specifically for self-directed customers, advisers are able to charge customers a fee and point them to the direct platform in cases where they think it is more appropriate.

Platform charges start at 0.40 per cent for the first £50,000 of assets, moving to 0.35 per cent for the next £200,000 of assets, 0.25 per cent for the next £250,000 of assets, with no charge on assets over £500,000.

Aviva follows rivals Aegon which launched Retiready in 2014. Aegon’s platform offers investments restricted to a fund range delivered by BlackRock and is available to orphan clients as well as new customers.

Standard Life says it offers products and services to direct customers, but that the “focus of its platform business is on supporting the provision of high quality advice and ensuring our platform can support sophisticated advice propositions.”

A Prudential spokesman says D2C is an area it will “continue to look at” but that it is “unlikely” to have any details to share before the end of the year.

Platform experts say life companies’ attempts to rival Hargreaves Lansdown are likely to prove futile without massive investment.

Threesixty managing director Phil Young says equity analysts are pushing firms into following Hargreaves’ business model.

He says: “There are two types of D2C models out there – the defensive approach where firms need a way of servicing clients to keep them on the books as advisers retire, and the other is an aggressive play for genuine new business and new clients.

“Most people have something in place around the first model, but it’s a massive, expensive leap up to try and develop something that competes with Hargreaves.”

The Lang Cat principal Mark Polson says providers serious about cracking the market will need to “invest relentlessly” over many years.

But Platforum head of direct Jeremy Fawcett says “Given the strength of Aviva’s brand and its ability to reach prospective clients, it could do well.

“It’s less about competing with incumbents and more about getting the targeting right. It’s going to be all about execution and we’re already encouraged by the excellent MyAviva app which we’d expect to be central to the investment proposition.”

Wingate Financial Planning financial planning director Alistair Cunningham says: “I do not really understand why providers who principally operate in the financial advisory space would want to divert resource to a D2C proposition.”

He says D2C platforms will be left fighting for Hargreaves’ “scraps”, such as “disenfranchised advised clients, those leaving group schemes, and inertia sales”.

Cunningham adds: “I certainly have nothing against D2C platforms, as they offer something very different to holistic advisory firms like ours, but I do wonder if D2C platform spending is likely to be the most efficient investment.”

Expert view: Mark Polson 

Another week, another D2C platform’s details start to emerge, and this time it is Aviva.

By our count that is the 33rd contender vying for the self-directed market.

Is there really enough market to sustain all direct platforms, especially when you factor in another 30 or so advised contenders?

This is one of those times when proposition teams get the big boys in to “size the market”.

In our industry, the sizing exercise goes something like this: “The total UK investment market is £xxx trn, and that’s without all the money languishing in rubbish savings accounts, so if we can get just 1 per cent of that we’ll be the next Hargreaves Lansdown.”

Value pool guesswork is fun for a pitch for investment from the board, but a couple of years down the line when assets under management have fallen somewhat short of expectations, the fun stops.

Once you start deducting “potential” money that will never-ever-in-a-month-of-Sundays move to your shiny new thing (let’s remember the investment platform market is very, very sticky), the slice of D2C cake you might enjoy is likely to be a fraction of what you are hoping for. In Aviva’s case it has a back book to play with but even that can be fraught with difficulties; not least defining who is an advised client and who is not.

In a market where providers of capital want a quick payback, it is one thing to launch a slow-burn, marketing-led proposition; it is quite another to stick with it and invest relentlessly in the engagement work to make it, very slowly, fly.

Mark Polson is principal at The Lang Cat



Aviva launches D2C platform

Aviva has launched a direct-to-consumer platform including an Isa, Sipp and general investment account. Customers will be able to manage their savings, investments and pensions in one place, including buying, selling and switching investments. Annuities can be bought direct but not through the new platform. An Aviva spokeswoman says: “Aviva’s consumer platform is now open […]


D2C platforms attacked over exit fees

Three leading direct-to-consumer platforms that charge exit fees have been accused of making customers pay for their own failure to bring down the costs of transferring assets. Last week, Axa announced customers on its Self Investor platform would be given up to £750 towards the cost of paying exit fees levied by ceding providers. Axa […]


Santander to launch D2C platform

Santander UK plans to launch a direct-to-consumer platform next year and is looking for a third party to deliver the technology. The Financial Times reports the platform will be open to both existing and new customers, with the bank looking to offer customers use of online risk profiling tools and model portfolios. Santander did not […]

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Hargreaves Lansdown has unveiled the details for its newly launched non-advised service Portfolio +. The “third way” proposition provides investors with ready-made portfolios managed and rebalanced every six months by the HL investment research team. There are six portfolios to choose from, ranging from Adventurous Income to Conservative Growth. When choosing a portfolio investors can select their […]


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. There is a strong demand for non-advised, easy access, online facilities for DIY investors and this is a natural development for the major brands. I don’t see why it should end in tears.

  2. Are these developments driven by a strong belief that the consumer wants their D2C offerings? Or is it that they are failing to achieve the profits they need from dealing with advisers?

  3. Can a automated system really fulfil the true needs of our clients? Sometimes clients need to be challenged to make sure they are on the right track and putting their hard earned money in the right place.

  4. Our perspective is framed by risk. In the case of D2C platforms it’s around reputation risk caused by the likely poorly developed suitability engine that sits at the heart of their proposition. Customers are likely to become unhappy when their investment fails to meet their needs and expectations. When we look at the various approaches taken by D2Cers to deal with suitability we see choppy seas, and corporate apologies ahead.

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