Ah, summer. The Platforum team is bobbing in the Italian med with buckets of gelato back on the beach.

OK, not really. In fact, we’re stuck in our offices like you. And it has been a busy week. Between publishing three reports (Consumer Insights update, the Sweden and Switzerland report of our European Fund Distribution series and a direct platform market update), we ran the J.P. Morgan Corporate Challenge, baked cakes for charity and of course gossiped about the potential plans from Philip Hammond for pension reform. (More importantly, one on the team returned from paternity leave while another left for a honeymoon…)

Before we kick into pensions I wanted to highlight something we noticed in Brewin Dolphin‘s H2 results. In commentary about the success of their on platform model portfolios they revealed plans to launch “a direct access platform … to further expand accessibility for intermediaries.” We are assured that this “platform” will only be for advisers that don’t currently use a platform – a rather small niche. This may raise challenges for advisers who like models on platform because it allows them to switch DFMs. If the charging structure is much more competitive advisers could face a dilemma.

Back in the dark days of December I had predicted: “in 2016 we will see more platforms developing asset management capabilities (a la Hargreaves Lansdown – but in the adviser space).” I added “We will see the continued rise of model portfolios on platforms”. We have seen some platforms launch asset management capability and understand others are working on it. We’ve seen continued growth of models on platform. In fact, Brewin reports a 41% increase in AUA in models in the past nine months.

Let’s turn back to pensions and Hammond’s brief… British investors tell us that they are more likely to have invested through a pension provider than through any other channel. But when we ask them about future intention, more investors say they will invest through their bank. Pension providers come second.

This highlights both the fragility of pensions but also the potential disruptive power of the banks.

Let’s go back to those predictions, Platforum senior analyst @SeathMiranda predicted that Osborne would move to taxed exempt (TEE) pensions relief – but that is looking less likely since the referendum. We think that is good news. Pensions are an important investment channel for investors and we need to encourage people to save more for retirement.

This also reminds us of the disruptive potential of the banks. One third of British investors who plan to place additional investments in the next 12 months plan to do so with a high street bank. This compares to 27% via a pension provider and 27% through an IFA.

@crespoRodo, another senior analyst on the Platforum team, predicted that a couple of big banks would “start the battle for winning the hearts of investors by finally getting the transition from being a saver to becoming an investor right.”

We’re beginning to see the banks return to providing advice and readying D2C platform launches. Displaying investment account balances next to savings account balances on the online banking platform may become commonplace quite soon.

The banks could certainly be a major disruptive force. Our report out earlier this week shows that bank investment propositions enjoy the strongest brand awareness in any channel – more than platforms, life companies and the best known financial advice companies. A well-known and trustworthy company name still features at the top of the list of factors that influence the choice of investment platform.

We think the banks could help bring more people into investing and that this is a good thing for the entire industry. We shouldn’t see this as a zero sum game. 44% of investors told us in May that they don’t plan to make an investment in the next twelve months – we need to get the number who are investing up regardless of where investments are made and we think the banks have a very good opportunity to bring more people into the world of investing. This is good for the industry and good for consumers, provided that the banks place the interests of the customer first (rather than those of either themselves or the shareholders as has all too often been the case in the past).

 

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