RDR’s orphan clients will bolster D2C: Axa Wealth
- ‘Advice gap won’t be closed if Lloyds axes service’
- Competing on merit: the new world for fund houses
More on Companies & People
Speaking at the Westminster and City ‘The Future of Wraps and Platforms’ conference today (2 October), David Thompson, managing director of marketing and distribution, Axa Wealth, explored how RDR-compliant distribution models and current market conditions are driving market change, and how client needs and demands are altering.
He said that, for wraps and platforms to achieve operational efficiency of scale while meeting client needs, platform propositions must evolve to reach mass market and less affluent consumers.
D2C and B2B2C are set to play a key role in delivering less complex investments to this fast growing group, which Mr Thompson said presented a “huge opportunity” for advisers and platform providers.
Mr Thompson said: “I predict a boom in both ‘direct relationship’ - direct investing via an advisory firm, and ‘direct transactional’ - pure D2C - as a predicted 40m client accounts become orphans as a result of RDR.
“Not only are platforms making it easier for clients to manage all their assets in one place, they are also making it easier for clients who don’t need full blown holistic financial planning to have access to more simple investments and to construct simple investment portfolios themselves.”
He reminded delegates parts of the mass and less affluent segments are at risk of being squeezed out post-RDR as the cost of advice will not be attractive.
Therefore, lower cost and more easily accessible non-advised investment services are required to serve this segment.
Mr Thompson said: “A non-advised investment offer can sit alongside an advised offer neatly to match the different needs of the customer and will present a much more services based approach. This is why I believe B2B2C is an important business model as well as D2C.”
However, to be successful, Mr Thompson suggested advisers and platforms need to consider a few rules. He said: “Aim to take the hard work out of investing. We put too many hurdles in front of investors, so we need to make the overall customer journey as simple as we can. If we don’t, investors will go elsewhere.
“It’s all about the client experience: online in particular needs to be best in class and transactions real time. This means we need customer insights, far beyond levels typical in this sector.”
He did not believe direct was a threat to advisers, adding: “There is huge change sweeping through the industry and advisory models are changing. Both direct-to-consumer propositions and the growing importance of workplace pensions are ushering in innovations and market opportunities for advisers and platforms alike.
“Far from being a damp squib, I see RDR as an opportunity for the industry to respond to the technological, socio-demographically, and cultural shifts spreading like a pandemic across the UK and around the world.”
This coincides with the launch of Axa Wealth’s online service, Self Investor, which can bridge the gaps between advice and going direct. It can be viewed at www.axaselfinvestor.co.uk