Will the platform market really see extensive shopping around?
If it doesn’t, regulators, platforms, fund managers and, to a lesser extent, advisers may wonder what all the regulatory fuss has been about.
Transparency of choice followed by inertia in the actual flow of money going onto each platform would be disappointing to those who want to see markets working at their most efficient.
That’s why a guide for consumers by platform consultancy the Lang Cat, entitled ‘Come and Have a Go – A Direct Approach to Platform Investing’, should be of interest.
It represents an attempt to explain the complicated business of selecting a platform to direct investors. It is a 45-page booklet, which perhaps shows the scale of the task.
The language is as irreverent as one might expect from Mark Polson & Co. The section on what certain types of investors might do is brave enough to recommend a few particular platforms.
But for do-it-yourself investors, the most interesting section is surely the price list across the various wrappers – for Isas, Sipps and share dealings – with an overlaid heat map to show where the high and low charges are for different amounts of assets.
If money does move to match the regulatory opening up of the market, it may not turn the market inside outThe question is, will this or other platform price guides – say, for example, from Justin Modray’s website Candid Money – lead to substantial asset moves?
Or will they simply serve a small minority; those who are out to find the cheapest price for each element of investing.
If money does move to match the regulatory opening up of the market, it may not turn the market inside out. But it could still make and break some businesses.
Perhaps of more interest for investment advisers is which platforms offer the best help in terms of guidance. Just one firm, Retiready from Aegon, is seen as offering a fully ‘guided’ investment service.
Perhaps the presence or absence of a guided structure will become almost as important as price for orphan investors.
Of course, the nature of advised services suggests the choice of platforms on that side of the market will not be shaken up as much as on the consumer side – the clients’ relationships with particular platforms are often much stronger.
In addition, there are practicalities too. There is such a multiplicity of choice, even when it comes to execution-only services, that the Lang Cat has had to produce quite a long document even if it is in a relatively light-hearted, handy form.
A similar document covering advised platform costs across the UK would run to several hundred pages. Yet perhaps advisers need to keep an eye on events on the consumer side of the fence.
Big shifts in assets could change priorities in this market with implications for advisers, their business partners and their clients.
In addition, if consumer becomes the main channel for accumulating assets for younger people, as the Lang Cat’s guide suggests, at some stage advisers are going to see consumer platforms as a worthwhile potential market for their advice.
The platforms themselves may have something to say about that, of course.
John Lappin blogs on industry issues at www.themoneydebate.co.uk
