Sam Handfield-Jones, co-head of Seccl Technology at Octopus Investments, told FTAdviser the idea of a platform as a “separate business” would change in the future leading to better integration between advice firms and platforms.
Platform technology firm Seccl was acquired by Octopus earlier this year and plans to allow advisers to create their own platform in-house, including offering funds, investment trusts and share dealing.
He said: “In the current set-up if an advice firm wanted to improve customer experience or retail cost then they can only switch platforms or reduce their own fees.
“But the future is customisation. If you look at it, what consumers are going to increasingly want is customisation. You have it in every other aspect of your life.”
Through Seccl, advisers would be able to create their own platform that is fully integrated into their advice firm.
Mr Handfield-Jones said: “The reason advice is so expensive is because the way advice firms are run, and their relationship with platforms, is inefficient. They can’t integrate into the adviser’s back office system.
“If systems could integrate and talk to each other then you could cut out a lot of the costs of giving advice. Then you can offer it to smaller clients with less investable assets.”
People falling into the financial advice gap tend to be described as those who would benefit from financial advice, usually to support their long-term financial needs, but who are unable or unwilling to pay for it.
Recent research showed the gap between those with access to affordable financial advice and those without has widened in the past four years and commentators expect it to widen further when a major cohort of advisers reach retirement.
Martin Bamford, head of client education at Informed Choice, said: "Seccl are spot on with this view. The adviser-provider relationship is a constant cause of inefficiency, ramping up cost for the consumer.
"While vertically integrated models are often slated for a perceived lack of impartiality, bringing solutions in-house gives the adviser more control and ultimately benefits the client through faster processing, better reporting and lower cost, it’s well worth considering."
Octopus said a significant number of advisers had approached the company looking to integrate a platform into their advice firm.
As at the end of November, 29 firms at the £1bn assets under management or less level were in conversations with Seccl about running their own platform with three new enquiries arriving every week, he said.
The two main reasons stated were a desire to have more control of the client’s experience and to offer lower costs for clients.
According to Octopus, a number of these firms were currently applying for ‘variation of permissions’ with the regulator so they could operate their own platform.
On top of this four larger firms, with more than £1bn in assets, also wanted to run their own platform, the provider said.
Ruth Handcock, chief executive of Octopus Investments, said: “One of the main reasons that financial advice is unaffordable or under-utilised in the UK is because the sector has not kept up with innovation at the same pace as other industries.
“The absence of a core technology revolution in wealth management means that the same problems we’ve been talking about for years – endless re-keying, restrictions around features such as decumulation or tax calculations, complex migrations and integrations – all persist.
“We truly believe that Seccl has the power to change that.”
imogen.tew@ft.com
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