Well, it’s been a busy few days in platformland. First of all there was a very interesting debate between Hugo Thorman of Ascentric/IFDL and David Ferguson of Nucleus on the importance or otherwise of owning your own technology. I was going to write a bit on that but ended up getting huffy about Active Member Discounts on GPPs instead.
I’m glad I didn’t, as it happens, because our dramatis personae have been in the news again today. I don’t know if they synchronised watches, but both Ascentric and Nucleus announced plans to launch IFA-branded direct to customer wraps. This is known by wonks like me as B2B2C (business to business to customer) and it’s how I’ll refer to it from now on. We should say that Cofunds have been doing this for a while (try www.commfreefunds.co.uk) and AXA Wealth are limbering up too. It’s B2B2C Central down here.
A saw of mine is that we shouldn’t confuse people’s desire to buy with our desire to sell. But there is a sizeable chunk of the population who don’t want or need investment advice – this is different to tax planning advice by the way – and who might be interested in doing stuff themselves. If they know an independent adviser is close at hand then so much the better.
Launching a disintermediated platform in this way needs adviser buy-in, and it’s noticeable that Nucleus and Ascentric both enjoy high levels of adviser trust and confidence, making them well placed. Cofunds have their detractors but are broadly trusted too. Elevate is interesting – can a lifeco owned platform avoid the ‘nicking our clients’ hooha? It’s a brave move from them and I’ll watch with interest.
What I like about the emerging propositions is that they don’t break the link with advisers completely. The client transacts themselves, but they can hit a ‘Don’t Panic’ button (and wouldn’t it be great if there actually was a button with that on) and get back to their adviser for some fee-based servicing.
I hear tell of an IFA who is starting to refuse to do any implementation of products as part of the standard service he offers. Implementation is, say, another Â£500 at outset and then attracts an ongoing fee. The idea is that clients will refuse to pay, try doing it themselves, find out it’s a nightmare, and come back – this time valuing the incredible weight of administration advisers undertake on behalf of clients. Quite smart. It’ll be interesting to see if advisers use these propositions fornthis kind of thing.
In terms of clients, it’s not just the self-directed. Those clients who just aren’t economic for IFAs to look after don’t have to be cut loose. They can do their own thing without losing touch. Personally, I think the platforms industry has more to do to help IFAs service the mass affluent in an economic way, but this is certainly a partial solution for some.
But back to the technology debate, which ends up being very relevant here. Ascentric build their own through IFDL and have become adept at supplying ‘black box’ componentry for major firms who want control of the user experience (UX) themselves rather than using the Ascentric version. Succession is a good example of this. It’s smart business, albeit at a low margin, and it’s arguably moving the Royal London-owned provider forward at greater pace than their standard offering. So building a B2B2C user interface and journey from the ground up will use their core skills in the under the bonnet stuff but stretch them on the UX stuff.
By contrast, Nucleus buy in tech from Bravura. And although the overall experience is controlled by them, the platform’s UX for advisers doesn’t deviate too far from the Bravura standard. Nothing wrong with that, incidentally. We hear the Nucleus B2B2C offering will be ‘stripped down’, but anyone familiar with any current wraps will know that they ain’t like buying a CD from Amazon. So Nucleus have a different challenge from Ascentric. They are very adept marketeers and fantastic at building a sense of community, so you’d expect them to create a proposition that really grips investors. Their stretch will be in working with Bravura to fundamentally redesign the UX to make it considerably easier to use. Elevate will have a similar issue with FNZ – and perhaps even more so given the complex nature of that system.
Different companies, different approaches, building different propositions to tempt the same market. Who said financial services was boring?