Growth of D2C platforms threatens advisers
The growth of direct-to-consumer platforms in the UK threatens to cut out the role of advisers as asset managers restructure their business models, a report from Cerulli Associates has claimed.
The 24-page report, Taking a More Direct Route: Benefits of Cutting out the Middleman in Europe, stated that within the third-party space, platforms were gaining at the expense of advisers.
It said since the retail distribution review, investors increasingly have been going solo, with only occasional strategic and holistic guidance from advisers.
It added that since the end of recession fees, such as trail commission paid to advisers from asset managers, advisers were no longer necessary to a fund manager’s distribution, and more fund managers were likely to start creating their own platforms to sell to clients directly.
The report stated: “As retrocessions recede, there may be more scope for high-profile asset management firms with sufficient scale to become even more direct through their own platforms without burning any bridges with established D2C channels.”
And it added that if an investor were to choose a fund from an asset management company, if that manager also ran the platform, the investor could also cut out the third party costs of using a platform.
However, not all asset managers are ditching the adviser as a means of distribution.
JP Morgan Asset Management seems to have bucked this trend, after it announced on Tuesday 30 June that it would stop providing certain investments directly to retail customers, passing 6 per cent of its individual client accounts to Bristol-based Hargreaves Lansdown instead.
Hargreaves Lansdown will take on up to 7,000 clients and £370m of assets, as a result of JP Morgan Asset Management no longer offering FTSE equities, and other non-JPM investments, to direct individual clients. It will also cease to provide the JP Morgan Sipp and JP Morgan Cash Isa.
Adviser View
Trystan Lewis, financial planner at Cheshire-based Griffin Wealth Management, said: “I do not see platforms as competition for serious financial planning. One can access a platform directly and not pay for advice, and with investments recently up, DIY investors are currently confident – but what happens when the markets turn the other way?”
