As we approach the Easter weekend and a well-deserved break, we thought we’d take a little time to reflect on what we see as the symbiotic relationship between adviser platforms and their adviser clients.
The future health of platforms are inextricably linked to the future success of advisory businesses. In our recent UK Adviser Platform Guide we took a look at how both groups evolved over 2015. One event loomed large in our conversations: the pension freedoms.
Both platforms and advisers have shown their mettle, readying themselves to meet the pension freedoms, the biggest shake-up in long-term savings for a generation.
One Chief Executive of an advisory firm that we spoke to summed it up: ‘There were 380,000 annuity purchase in 2013 and only 80,000 in 2015. That is 300,000 people who want more complicated stuff’
Platforms, providers and advisers could easily have fallen over with a tight implementation timetable. But they rose to the challenge.
Platforms, particularly those with a pensions pedigree, have seen strong new flows into pension wrappers. 51% of assets sit in a pension wrapper as at 31st of December and 70% of net sales went to a pension wrapper in Q4 2015.
Advisers faced an additional challenge in the form of insistent clients. But firms got their houses in order: ‘We are not hung up on insistent clients. We have a clear procedure, we are insistent advisers…’
And the pension freedoms has driven growth across the board. One advisory firm telling us that it has seen ‘its biggest increase in client enquiries and it has also been a record year for profitability.’ Old Mutual Wealth’s quarterly report name-checked the pension freedoms as driving flows and Standard Life had a record year for net sales, posting £4.4bn.
Crucially, it has also opened up flexibility for investors to work with advisers to choose the right path in retirement. We will look at this developing landscape in more detail in our Retirement Funding Guide out in April.
But just like the kid who misses out in the Easter egg hunt, some developments in 2015 left advisers feeling a bit empty inside. Advisory businesses have been investing in technology and better support through paraplanners to help their businesses to grow. In turn, they have higher expectations around the support, service and technology that their platforms can offer them. Whether the adviser is part of a vertically integrated network or independent, this is a critical partnership.
At a recent Platforum roundtable, we discussed the impact and influence of paraplanners. Whilst the business owner might sign off the platform contract, it is the paraplanners who will vote with their feet when the platform tech or service isn’t up to scratch. Service was the top reason cited by advisers in our recent survey for transferring assets away from platforms. Lengthening technology upgrade programmes at platforms are also causing frustration.
The best platforms will provide advisers with the flexibility to take their business where they want to go. Credit goes to Transact, which topped our User Leaderboard again this quarter receiving top marks in quality of customer service, technical support and choice of funds and tax wrappers.
If, and when, challenges arise, the overwhelming feedback from advisers is that clear communication helps to ease their pain.
A close relationship with their adviser client will also help platforms to navigate the impending shifts in the advisory sector.
There is likely to be consolidation. One adviser that we spoke to told us: “There is a squeezed middle in the advisory sector. The push is either to become a national firm where you have scale or to stay as a small firm and drop down to a 1 to 2 man band.” The news of Almary Green’s acquisition by 1825 throws this comment into sharp relief.
The platforms that keep close to advisers and their needs have the best chance of navigating what may be choppy waters ahead.
And now for the shameless plug. At the Platforum 2016 conference, we want to promote an open dialogue between platforms and advisers about the future health of our industry. Our interests are inextricably linked. This year, we will also place the end-investor front and centre in our sessions in 2016 -Platforum’s year of the customer. Join us on the 11th of October to share your views.
We hope the Easter bunny visits this weekend!