Senior structural changes at the heads of most of the big platforms over the last calendar year have really highlighted, for me, the end of an era. From 2000 to 2010, platforms were smaller businesses and many of them were run by people with an entrepreneurial streak, spotting the next big thing and genuinely believing they had the mechanism and the opportunity to offer clients a better deal. Platforms were almost maverick – the money-sucking start-ups seen by many directors to be all hot-air and quite literally a waste of time. I recall presenting to a board of a life company in 2003 where half of them were almost spitting with rage at the ridiculous notion that the majority of IFA distribution in the future would be channelled through these platforms. Platform assets had only gone from £10.4bn at the end of 2001 to £15bn in 2003 so you can see the reason for scepticism.
7 or 8 years ago, it was well known who the platform boss was – and access to him (for it was all hims) was relatively easy. Meetings with Fidelity’s James de Salis and Cofunds’ Stuart Dyer in 2003 were set up directly with them and it was almost a question of being let in through the door by a couple of guys having a ciggie break. One other platform boss probably would have had the meeting on the pavement, over a fag. Last week, in Canary Wharf to see a platform business, it took 15 minutes to get from the front door to the right person’s office and my bag was x-rayed on the way through. They clearly didn’t feel that 2 nappies, some wipes, a teething ring and 18 squashed raisins posed a security threat. The point I’m getting to is that these days, platforms are no longer an adjunct but the heart of the businesses they reside in – and these are serious, serious businesses.
Look at AXA and Standard Life for example. Even last year these groups had clear, distinct platform businesses and bosses. Today, they have accelerated their re-invention, selling bits along the way, and the platform isn’t just an arm of the business – it IS the business. At Skandia, there is no real clear platform boss anymore – the business is a platform. And so the trend continues.
As platforms move into the big league and are arguably losing a little of their ‘boyish cheek’, it does pose a dichotomy for the smaller players. We are currently researching fund supermarket inflows. Why, despite IFA satisfaction levels being low, do the quarterly inflows keep on stacking up? The answer is predominantly price (obviously for certain sized accounts) and brand (perceived security by clients who have seen the Fidelity name on a billboard). What do IFAs like most about the smaller wraps? The feeling that they have a say in the business, that it is metaphorically 1 minute to the CEO’s desk, not 15 minutes. However, the irony here is that ongoing success will inevitably challenge the very thing that has lead to their success. That’s a real challenge as the success factors of the supermarkets (price and brand) are much more sustainable. If the supermarkets could only improve on providing access to human beings, our IFA contacts tell us they would be much more successful. A fuller report on this research will be published in the third edition of the (plat)Form Guide, out in August. Shameless plug over.
I’m pleased to see platforms come of age. I’m pleased to think that some of our projections all those years ago which were scoffed at are coming true. I’m pleased that no-one gives a toss really if it’s a supermarket or a wrap (or even a platform?) anymore – it’s just a way of doing business. But I do feel a small sense of sadness that the inevitable has happened. The teenager has grown up, become a serious adult and consumed by a larger corporate structure, and sometimes, just sometimes I miss those entrepreneurial, teenage kicks.
Holly Mackay, MD, The Platforum
