‘Platforms coming round to holistic fund offering’

‘Platforms coming round to holistic fund offering’

Some of the largest platforms are starting to shift towards allowing full investment trust access, meeting a growing need among advisers for ITs and ETFs to be bought on-platform.

James Budden, director, marketing and distribution, clients department for fund manager Baillie Gifford, said: “It is a strange world. We are seeing strong demand from smaller platforms who have allowed advisers to buy investment trusts and exchange traded funds on-platform.

“However, these smaller platforms still occupy only 30 per cent of the platform market. As demand grows, the three main platforms – Cofunds, FundsNetwork and Old Mutual – will have to allow advisers whole-of-market access.”

Article continues after advert

Some reasons cited by platforms in the past to explain why they have not added investment trusts include a lack of adviser interest, perhaps because of the difficulty for advisers in explaining gearing and net asset value discounts to clients, or the fact that ITs and ETFs have intra-day pricing, whereas most platforms only price funds once a day.

Old Mutual Wealth, which incorporates the former Skandia platform business, is in the process of upgrading its platform technology.

Paul Feeney, chief executive of Old Mutual Wealth, said the company was committed to spending more than £160m over three years on new technology, which when complete is expected to provide access to ITs, ETFs and other such investments on platform.

Old Mutual Wealth’s platform will be fuelled by DST’s Blue Door platform technology, and the project is roughly half-way through.

Mr Feeney said: “This will give us the most modern wrap platform technology. Old Mutual Wealth is committed to financial advisers and to the platform market and this investment is a sign of that commitment.”

The FundsNetwork platform made Woodford Patient Capital Trust available earlier this year when it launched. It also offers Fidelity ITs and 50 ETFs. A spokesman said: “We are enhancing our platform capability, which will include the addition of investment trusts and ETFs from a range of other providers.”

Stephen Wynne-Jones, head of marketing, digital savings, at Cofunds, said: “This is on the list of developments we would like to progress. However, there are no fixed timescales, as demand from our clients remains very low.”

Meanwhile, platform Novia has seen a 70 per cent year-on-year rise in advisers selecting ETFs as part of their clients’ investment portfolios.

Business into this asset class on Novia now accounts for more than £100m in assets. The most popular ETFs on the platform are the iShares JPM USD Emerging Markets and the iShares MSCI Far East Ex Japan ETF.

Adviser view

Doug Brodie, founder of London-based Master Adviser Chartered Financial Planners, said: “To date, large platforms have chosen which assets they want to permit the clients of advisers to hold.

“These platforms change in their own good times to match their own needs. There is an embedded difference between how independent advisers work and what providers think they need.”