Standard Life Aberdeen  

Future of investments is 'mass customisation'

Future of investments is 'mass customisation'

The future of centralised investment propositions is mass customisation, according to a platform expert.

Alistair Black, head of wrap platform proposition at Standard Life, said mass customisation gave the investment sector the opportunity to individualise client portfolios and respond to investors' personal needs in an efficient way.

The term was used to describe technology that is able to create more bespoke portfolios for investors automatically.

Speaking at the Intelliflo Change the Game conference yesterday (June 18), Mr Black said "industrial revolutions" often transformed the way industries worked from "bespoke services" to "mass production".

This was the same with investments, he said.

According to Mr Black, a combination of factors, including client demand and regulatory change, had promoted the use of technology in the investment industry.

Centralised investment propositions have been subject to regulatory change following the introduction of the Mifid II rules and in particular, Prod, which requires an element of client personalisation when selling products.

This extra regulation has caused advisers to either outsource solutions, create in-house discretionary solutions or automate their services, Mr Black said.

But according to him, the future for investment propositions is "mass customisation through individually managed accounts", where assets can be restricted or substituted depending on a client’s needs.

He said: "There’s a wide range of possible outcomes that clients may want to be covered.

"For example, auditors who are not allowed to invest in certain stocks or clients who wish to go down the ethical route.

"It could also be clients who are at risk of capital gains tax. If they are in a model portfolio that gets rebalanced often, this could create significant capital gains tax liabilities."

He added: "Adjusting something that is already made is always going to be cheaper than starting from scratch."

Standard Life Aberdeen is currently rolling out a change on its platform that enables automated portfolio rebalancing.

Last month the company launched a model portfolio service on its platforms. This consists of 15 multi-asset portfolios divided according to five risk levels and is branded Separately Managed Accounts.

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