Platform development is rightly a collaborative approach and for Skandia it has been that way for more than 30 years.
We took a collaborative approach when we launched researched fund list WealthSelect. Advisers asked us to add a managed portfolio service because more and more of them (particularly in an adviser charging environment) are increasingly focusing on the pure financial planning needs of clients.
The managed portfolio service also provides a straightforward answer to the due diligence requirements of investment advice.
The latest Skandia Adviser Insights survey (June 2014) of almost 1,000 financial advisers reinforces that view.
Advisers are spending more time on financial planning, but due diligence is a major concern, with 82 per cent finding the process increasingly demanding.
Assessing the suitability of investment solutions is considered to be the most important area of due diligence, well ahead of the due diligence on products or the overall choice of platform. The most important aspect of investment due diligence is considered to be transparency on charges.
This is only a snapshot, but it shows a sector advancing in terms of professionalism. The focus is very much on the quality of services offered to the end-client, with the cost in mind at the same time.
For many, the order of the day is face-to-face financial planning in a fee-based context, with investment advice outsourced to a specialist investment business, unless that is the adviser’s defined area of specialism. A game-changing proposition recognises that suitability and customer outcomes are paramount.
The fallout is the ever-growing evidence of an advice gap. A number of advisers remind me that they have operated on a fee-only basis for many years, even re-investing trail in some cases.
However, how many existing clients will happily write a cheque for hundreds of pounds for ongoing Isa advice, when the investment portfolio is already in place?
More importantly, what are investors expecting to have to pay their adviser for – the processing of their cheque, or for the expertise that assesses their financial needs?
Like the modern platform sector, customers are no longer neatly divided between ‘advised’ or ‘self-directed’, with many looking to use a combination of approaches.
Of course, that has led to innovation in the direct platform market, with some advisers also innovating to serve a wider and diverse client bank where possible.
Most of the advisers I speak to accept that a customer’s unwillingness or inability to pay adviser fees is a valid preference. They accept that many platforms may want to serve, say, a young professional with less complex Isa needs, giving them the option to self-invest.
That is very different from the ability to self-plan. Planning means a focus on their objectives, priorities, protection, retirement planning, choice of tax wrappers and cash-flow modelling.
Many commentators look to simplify and polarise the market into neat categories of old vs. new, or direct vs. advice. The truth is the market is multi-faceted, with ever-evolving investor requirements. The platform market is inherently innovative and will continue to listen, collaborate and adapt to these needs.
Steven Levin is global head of distribution at Old Mutual Wealth
