In the post-RDR world, platforms are gaining more prominence, but for Pat Shea, head of FundsNetwork, he is already familiar with this part of the industry.
Although he only took over at FundsNetwork in the UK in 2012, Mr Shea launched the Asian FundsNetwork business while he was managing director of the Taiwanese business at Fidelity in the early 2000s.
“So FundsNetwork is not new to me,” he laughs. “I did that [in Asia] for two-and-a-half-to-three years. Then I landed in the UK in 2005, initially heading up our European operations and client services teams. Then in late 2012 I was asked to assume the helm at FundsNetwork and I said yes literally a month before the RDR went into effect.”
In his current role he is managing an existing business, while previously he launched a new one.
“We were one of the early movers in the UK with the platform concept in 2000 and we captured a lot of attention and market share. What has been interesting is there have been so many new entrants in the market; one would say arguably too many for the size of the market.”
He adds: “I do question how sustainable that is. A pretty meaningful percentage of platforms is unprofitable, and yes we’ve got through the RDR, but there is more regulatory change on the horizon… [so] I [do] wonder in the long term whether certain types of businesses will have the patience and want to invest in that space.”
Taking control of a major platform at the start of the RDR has been one of the more “interesting” aspects of Mr Shea’s career, although he points out Fidelity has a platform presence in the US, Asia and Europe as well as the UK, and he has “worked in all of those markets in one shape or another in the platform space. So coming to FundsNetwork and supporting the platform business wasn’t at all foreign to me.”
Mr Shea is a career Fidelity staffer, having joined the company out of university in 1986 when his original ambition to be a lawyer fell by the wayside. “I first thought I wanted to be a lawyer. Then I thought I wanted to be on the investment side. Then I realised I really enjoy working with people, so merging that initial desire to be close to the investment process but applying it to the business seemed to make a lot of sense.”
His first role at the firm was as an accountant, before joining an internal consulting group, which provided exposure to international business, which in turn led to a job offer in Bermuda. “Who would say no to that,” he laughs, “so I set up a treasury and investment compliance oversight function there.”
This was the start of several ‘tours of duty’ with Fidelity. Mr Shea has now been stationed in seven different countries during his tenure at the firm, which has helped to fulfil his love of travelling. “I always wanted to be exposed to new places and different cultures, so I enjoy seeing the different aspects of different cultures. They all have their advantages and disadvantages – for example, Bermuda has gorgeous beaches and is beautiful but quite small. Hong Kong is cosmopolitan, international and one of the financial centres of the world [but] also has a lot of air pollution.”
While it was perhaps a bit of a shock for Mr Shea to arrive in the UK in the middle of winter away from the warmth of Asia, there was little time for him to stand still.
“I assumed the helm right as the RDR was going into effect. What I’ve found interesting about that is a lot of people were suggesting the demise of the adviser channel and massive reductions in advisers, but it remains one of the largest distribution channels in the UK.
“Yes, in the short term [the changes] have been a shock to the system and the RDR has meant a lot of the value chain has had to adjust to that. But as it settles down I think there is a massive opportunity for advisers, and platforms that are supporting advisers.”
He notes that regulatory change can be a challenge in the short term and a “distraction sometimes from some of the new bells and whistles you might want to add to the platform”, but in the medium to long term it’s better for the industry.
“One of my frustrations in recent years are little things, like the re-registration process and some of the inefficiencies that exist in the market. There are opportunities to make some of the processes between fund managers and platforms a lot more efficient and that would enable platforms to pass on some of those efficiencies and savings in the prices they’re charging the end consumer.
“Price is a big factor. There are a lot of platforms that are charging probably more than they are going to be able to in the future. It will put pressure on them, [and] it will be one of the things that probably knocks a few people out [of the market].”
A key opportunity at the moment, however, is the changes to pensions regulations.
“Historically platforms did a great job of supporting advisers and clients up to retirement and then the assets would leave the platform. With the recent reforms, I think it’s a huge opportunity for end consumers, an opportunity for advisers as they can stay engaged longer with clients, and an opportunity for platforms.”
Not long after taking over at the platform business, Mr Shea notes FundsNetwork completed a strategic review of the company that resulted in a three-to-five-year roadmap that identified areas where they wanted to make investments.
“One of those places was fortuitously in the pensions space. To me the retirement and pensions space is a massive, massive opportunity for advisers and platforms. I think a lot of what customers need already exists in one shape or form, and it’s about how you match the individual client needs with the products that are already in the market.”
However, the job doesn’t stop there, with Mr Shea highlighting continued “major investment” in the business, including an increased salesforce, more client-facing teams, and the rebuilding of websites.
“We’ve already announced in the past we would be expanding the proposition further to include brokerage and cash management and exchange-traded funds (ETFs) and investment trusts and bonds etc… all of that has been announced and is in [the] plan.”
The platform already offers a range of five Fidelity investment trusts through FundsNetwork, as well as roughly 50 ETFs.
Although there is no exact timetable for the additional changes, the firm adds that by “recently announcing our intention to support the Woodford’s Patient Capital Investment Trust IPO we are signalling our clear intention to drive this forward as quickly as we can”.
But Mr Shea emphasises that it’s not all about “bells and whistles” when looking to succeed in the competitive platform environment.
“It is about getting the basics right. You can try and talk about new bells and whistles, and we have some on the way, but client experience and customer services are where the battles will be fought.
“All platforms have 2000 funds, a call centre, a back office and so on; it’s the ones that are able to deliver that excellent experience – those are going to be the winners in the long run.”
CV
Pat Shea
2012 – present
Managing director, FundsNetwork UK, Fidelity Worldwide Investment
2005 – 2012
Head of European customer services, Fidelity International
2001 – 2005
Country head/managing director, Taiwan and managing director, Fidelity International
1999 – 2001
Chief operating officer Asia-Pacific, Fidelity International
1994 – 1999
Head of global investment compliance and fund treasury, Fidelity International
1990 – 1993
Internal consultant, Fidelity US
1989 – 1990
Director, accounting division – Fidelity US
1988 – 1989
Manager, accounting division – Fidelity US
1986 – 1887
Accountant, Fidelity US
