Today’s guest commentator is Ed Dymott, Head of UK fund partners for Fidelity International. The following views are his personal views and not necessarily those of The Platforum. Thanks to Ed for his contribution.
There is a cloud looming on the horizon which cannot be blamed on an Icelandic volcano. There are just over 20 working days until the first responses to the FSA’s Discussion Paper on platforms are due, and in spite of the logistical problems caused by Mount Eyjafjallajokull many people in the industry are forming their opinions for their considered responses. If you are reading this somewhere you did not plan to be today; I wish you well.
My hope is that the responses to the Paper remember why we are in business and who we are here to serve. As an industry, like many others, it can all too often be easy to focus on the complexity and detail of what we do. We invent obscure jargon; we can focus on the features rather than the benefits of our services; and pay too much attention to competitors at the expense of our end-customers. To try to better understand the challenges we face, we have just undertaken a European-wide survey of 9000 investors to understand their attitudes to investing. The results are consistent and surprisingly familiar – and represent the challenges we face in implementing RDR.
Over half of investors surveyed admitted to having a poor knowledge of financial products. They therefore see transparency on fees and simplicity of products as priorities. They consider their lack of understanding as a barrier to purchase. Although choice is important, investors want this to be manageable and may look towards guidance and place more priority on trust and security, especially in times of crisis. Investors feel they want control on their own decisions, but they also value advice and support in their decision making.
Our survey also reinforced the familiar reservations about perceived conflicts that can arise in financial services, and our respondents remain to be convinced over whether fee-based remuneration always represents good value. Ultimately investors want simple and transparent products and advice from advisers they can trust.
As our industry progresses with delivering the RDR we need to ensure we don’t lose touch with our end-customers. We’ve met few investors who have asked us to either bundle or unbundle our charges. Instead most want simple, clear and transparent disclosure and to be able to understand the total cost to them. Do they really demand and want to pay for unlimited choice? Do they understand the conflicts that may exist that underpin those choices? Do investors really understand what a “platform” is, and do they see it as any different from any other insurance company, stock broker or fund provider who is trying to sell them similar services?
This final question seems to be the one that we all need to answer. Who and what is a platform? Ultimately the services platforms provide such as account and report consolidation, be they offered by advisers, non-advice practices, insurance companies or stockbrokers, will be seen by investors in the same light. To protect investors, these services should be regulated on a consistent and even basis.
Finally as we enter the last 20 or so days of consultation, it leaves me to say how refreshing it is to see the FSA still willing to engage with us as part of what is the biggest change in the UK’s long term savings industry, and of course potentially to platforms. There is much debate to be still to be had – and there are many countries looking to the UK for their own developments - with both Australia and the Netherlands considering similar changes. We look at a 6 year programme in the UK astonished with where the time has gone. But spare a thought for distributors and advisers in India. From April 1st 2010 they effectively banned commission without the luxury of a consultation process!
Thank you to the Platforum for the opportunity to write to you all. I hope you all have good ‘volcano-uninterrupted’ weekends
