Pension freedoms heralded biggest change for platforms


Pensions are behind the majority of flows on platforms since the radical overhaul of the retirement rules, according to NextWealth’s Heather Hopkins.

“With the pension freedoms, there was an immediate shift in where flows were going to on adviser platforms towards a pension wrapper,” she told FTAdviser.

“Now, about 80 per cent of flows go to a pension wrapper on a quarterly basis and about half of assets sit in a pension.”

Ms Hopkins, who is managing director at platform consultancy NextWealth, explained: “That changes things significantly for the platforms because not only has that driven flows onto the platform, but it also means that assets will stay on the platforms for longer.”

She acknowledged pensions were just the first of many changes platforms had gone through recently, citing technology as the second most important change.

Ms Hopkins recognised a number of platforms are going through upgrades, or “replatforming” at the moment.

In January this year, Aegon completed the shift of 79,000 non-advised Cofunds customers onto its Investor Portfolio Service.

“Firms are investing heavily in their technology to get it ready and fit for purpose for the next phase of growth, to make sure they have a scalable back end proposition to be able to build the platform for the long run,” she said.

Asked how much impact the rise of platforms such as Nutmeg will have on investor relationships with advisers, Ms Hopkins admitted none of the robos had seen a huge rise in the number of users.

“I think that’s one of the questions is, will they really disrupt the market? I definitely think there’s a place for automated investing propositions,” she suggested.

“But I think what’s interesting is all these propositions are testing different ways of engaging with customers.”

She predicted that platforms like Nutmeg will help “offer a potentially slimmed down proposition to different segments of the population” for those who don’t want to pay the “full fat” fee structure.

Ms Hopkins also addressed the issue of diversity in the platform sector and said she hoped firms would look to improve diversity.

“There are lots of really good business reasons for that. It’s not just about women, it’s also about racial diversity and age diversity within firms,” she reasoned.

“I run a quarterly meet-up for women in the industry. It used to be just women in platforms and it’s expanded slowly to include women across financial advice and investments, so we’re a growing group that just get together.”

Watch the full interview at the top of this page.