PlatformsFeb 11 2013

Adapting to advisers’ needs

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Aquestion I have been asked often in the past year or so is: will all platforms survive post RDR?

My view is that the RDR will be good for platforms but it is hard to see why we need the 28 or so that are around today. How can they all possibly differentiate themselves to an extent where clients need so many options?

There is no doubt that the external financial backers of some platforms only have one thing on their minds: how do I get a return on my investment? With that being the case, there will almost certainly be consolidation. Some of the smaller platforms will have to achieve scale swiftly before their backers pull the plug.

So who will be the winners? For me, it will be those that listen to the needs of financial advisers and can expand their propositions to encompass wealth management solutions, rather than simple administrative services.

Financial advisers are in business to advise on and manage their clients’ wealth; platforms must support this, and this means more than just providing an IT administration vehicle with access to a range of funds and some tax wrappers.

It is important platforms offer a range of investment solutions that meet the needs of different clients. We know that many advisers are segmenting their client base and aiming to offer different investment services for each section. So, the platforms that are likely to succeed long term are those that also have the in-house investment expertise to create investment solutions to meet demand, as well as offering open architecture.

As they subdivide their customer base, financial advisers now have an additional option to consider: should they offer restricted advice instead of, or as well as, their independent service?

Much has been said about the RDR signalling the end of independent advice, with the majority of advisers going restricted. I don’t see it that way. Independent advice has survived many regulatory changes and there is a very good reason for that. It is a high-value activity that makes a difference to people’s lives.

Independent advisers will be around for a long time to come and we look forward to supporting them ad infinitum. But the distinction between independent and restricted advice is not black and white.

When they look at the needs of their clients, many independent advisers may decide that a restricted service is suitable for some of them, particularly if they can deliver it at a lower cost. If they decide to do that, then as a firm that only sells products via financial advisers we will, of course, support them.

It will be interesting to see how the market evolves in 2013 and how many advisers choose to offer a restricted service. It will also be intriguing to see which platforms can develop their propositions this year to help advisers expand their business.

So, how many platforms can the market sustain? It is difficult to see why it needs to be double figures but only time and market dynamics will determine the exact figure.

Peter Mann is managing director UK, Skandia