Happy New Year to all our subscribers and thanks for your interest, feedback and support last year. The Christmas break is always a time to reflect on what has been and prepare for the year ahead. At The Platforum we see some consistent emerging themes for 2010 which promises to be a bodice-ripper of a year for platforms.
1. “Dog Eat Dog”. Already sometimes viciously competitive, we see further aggressive competition with a very keen eye on the bottom line. Skandia’s cull continues with more redundancies announced this week and reported expense challenges internally combined with what we perceive to be a move to increase the online nature of the business. The ‘Marmite’ of the platform world, our IFAs submitting reviews either love them or hate them but they kept growing assets in 2009 and we’ll be very interested to see what type of IFA they target in 2010.
Continuing the competitive theme, we all know that IFAs love Transact – but has the Head Cheerleader lost some of her gloss? Our 56 IFA reviews of Transact received to date extol their virtues with one predominant moan – cost. This places them 5th on our ‘platform leaderboard’ of 16 platforms to date which have been rated by IFAs – if the costs were less and the website updated they’d undoubtedly be top. The reported move this week to cut their charges could just be to prepare for the reported float but I would also guess that it’s so positioned as a dignified response to an increasingly competitive market. In the early days it was only them and James Hay – in 2010 retention as well as acquisition must be a key concern so the move on costs seems timely to us.
Finally, with Aegon and Aviva joining the ‘life co platform’ providers, the challenge will be to differentiate and win those IFAs who see tax wrappers as commodities and don’t mind the idea of partnering with a provider platform. There’s a significant yet finite number of these IFAs and we think 4 platforms of this type (including Standard and AXA) is too many.
2. “Buddy Up”. IFA Consolidation – self-explanatory and largely driven by cost. Platform implementation brings order and annuitized revenue to the party. But again, fewer, bigger clients brings revenue pressures to bear on both platforms and asset managers.
3. “One size doesn’t fit all”. Not every client will need advice every time and Adviser Charging will push the need for a direct sales capacity. This is an immediate challenge for some platforms – especially those servicing a wide range of customers rather than pure niche HNW. Coupled with this trend we see direct to consumer propositions set to multiply as everyone tries to take on Hargreaves. Plus ca change – although I think there’s some interesting moves afoot here.
4. Employee benefits platforms. (Can’t think of a catchy phrase for them – corporate wrap is hardly going to get the party started.) Amidst all the inevitable guff from ‘experts’ this is a logical next step for platforms. We anticipate major developments in this market which will need a collaborative approach to combine required knowledge pools which to date have resided in very different areas and companies.
5. “Do Your Homework”. Increased requirements for IFA due diligence and platform selection – and suitability assessment at a customer level, not just a corporate level.
6. “D’you wanna be in my gang?”. Ongoing moves from the former supermarkets to upgrade to the broader range of services offered by so-called wraps and get RDR-ready. We think this is a really important decision – is your core IFA customer base likely to fall into the restricted or independent category? Why the entire platform market aims lemming-like to service high net worth customers and IFAs servicing complex clients is beyond me and we see opportunities for simpler, cheaper platform models. Is 2010 really going to be another year when the banks fail to get their acts together (sigh?) or will we finally see moves in this space to use platforms to service the mass market/mass affluent?
We’ll leave it at 6 in the interests of not sending you all to sleep in Week One. To sum up in a sentence, we think that COSTS, COMPETITION, REGULATION, CUSTOMER TYPE and SERVICE are the things to keep an eye on this year. We haven’t really touched on service but will be exploring exactly what this means in some detail in our upcoming research, The (plat)Form Guide. One platform which has hit the news quite a lot for signing up new clients is starting to generate some service grumbles from existing IFA clients – a dangerous time in the business evolution.
What have we missed or what is tosh? On our new website, you can post your replies or add a comment on the homepage in response to this. So welcome back to 2010 and I hope it’s a great year for you all!
Holly
