Anyone who’s ever had coursework to do for anything knows that feeling of fear as you have to go and ask your tutor / teacher / boss for an extension. I can’t help remembering a time when, hung over, I had to go and ask my English Language tutor for one, and I just couldn’t be bothered coming up with the usual creative excuse. So I chapped the door, went in and said “I’ve not done it, can I get it to you next week?”. The tutor stared at me for a moment, said “Aye but make sure you do” and went back to pretending to work.
Little asking-for-an-extension story there. Lovely.
But we don’t want thinly-veiled political whimsy, do we? We want flinty-edged Updates, and that’s what we’re all about; at least those of us who aren’t on our Easter break.
BASIC ARITHMETIC FTW
Have a look at what Interactive Investor has done to its charging structure. For the first time in a long time, we have a provider really trying to do something different on fees. Along with Alliance Trust Savings – shortly to become part of II if all happens as planned – II has been a champion of the fixed fee model for years. But outside of the sorts of people who really, really care about optimising pricing (hi Steve) this has never really caught the imagination in the way you might imagine. (disclosure: ATS is a client of the lang cat, though II isn’t).
I think the idea of a Netflix-style menu is nicely done. Not everyone will be happy – a straight buy-and-hold investor will pay more under the new structures – but more than that, it’s a decent way in to help people understand what’s going on. It also links fees to the activity on an account in a digestible way, rather than relying on good old basis points and what we’ve often called the ‘lazy upside’ of platforms who keep taking and taking and taking as portfolios grow.
II also has a fun tagline to go along with this: “It’s Maths Not Magic” which is pretty much what our Steve Nelson has been saying ever since we did our first baby heatmaps.
So it’s a well done to II and we will see if it really does catch the imagination of investors. The open question is: what happens to fixed fees in the advised sector? We still don’t know what will happen to the advised ATS book when and if the takeover happens: if it heads off elsewhere and loses its fixed-fee identity then we will have no choice in advised, but plenty in D2C, and that doesn’t sound right to me.
Portfolio sizes are rising and advisers tell us that they are writing more > £500k business than ever before. Some of this is DB-related (although we’re past the peak now) but simply put, there are more firms serving wealthier clients (and see Malcolm Kerr’s interesting article in the linky bit below). These are clients for whom some kind of capped or fixed fee proposition would be the business – both from advisers and from suppliers, including platforms. I can’t help thinking that someone will get something out there and if they can follow through on it then they will do rather well.
PLEASE LINK RESPONSIBLY
- This is a fascinating piece from Malcolm Kerr, the David Attenborough of financial services and a full-on Nashnul Treasure. His contention is that IFAs can start to offer family office type services and do better at inter-generational planning. I think he’s right, but the prize is even bigger than that – done right, I think there are few differences now between a wealth manager / private bank type and a really good IFA. Those differences there are can be closed through well-constructed alliances. I’d love to see more firms taking this on.
- I told you MiFID II reporting was going to come back and bite us.
- No apologies, I’m going to punt one of our things now. We are running our first ever Scottish event – the lang cat Home Game – on 30 May in Edinburgh. We’ve got Maggie Craig from the FCA, John Rowland from Cicero, Anthony Rafferty from Origo and a bunch of great IFAs all talking. It’s going to be ace, and if you’re based in Scotland and reading this we’d love you to come. Details and tickets here.
- And in the spirt of Scottish stuff, the music slot once again goes to the inspiration behind the lang cat’s name, James Yorkston. Here’s the great video for his new song, “The Irish Wars Of Independence.”
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