This week Jeremy Fawcett (@jfawcett), Head of Direct, gives a mid-year update on the D2C market and contemplates the arrival of the Financial Advice Market Review.
We reported annual growth of 13% AUA for direct platforms back in February – far less than we’ve seen in recent years and much slower growth than the adviser platform market. Our UK D2C Guide update that subscribers received last week showed a much healthier 19% annualised growth rate to March 2015. However, half of the growth came from Hargreaves Lansdown whose market share continues to grow and Interactive Investor was the only other platform to report a big hike in assets outstripping everyone including the others with flat annual fees.
Admittedly, many of the others are distracted by technology upgrades or the integration of acquisitions. TD Direct Investing is bedding down its acquisition of Natwest Stockbrokers and Alliance Trust Savings is about to do the same with Stocktrade. Barclays Stockbrokers is building its new platform with FNZ, Fidelity Personal Investing is adding in-house stockbroking and Alliance Trust Savings is moving to GBST. Scary stuff given that Old Mutual Wealth is reported to be spending £250m on their move to IFDS with budgets escalating.
Interesting also to see consumer preference swinging towards investing ‘direct from the provider’ in our latest wave of consumer research. For tomorrow’s investors, the preference is banks. This supports the case for the likes of Barclays which is combining retail banking with its platform and Aviva which launched its D2C investment account in June. Aviva has seen all this before as it shunned the price comparison websites and successfully navigated the hugely disruptive disintermediation that the general insurance market went through. Many think investing is different – I’m not so sure.
Given that the government has announced another review to ‘radically improve access to financial advice’, providers from all corners of financial services need to keep an eye on the blurry line between advice and guidance. Advice will be ‘affordable’, ‘accessible’ and ‘high quality’ and the departure of Martin Wheatley may see a shift away from a vague hope that technology will fix the advice gap. Aviva are pushing for a loosening of regulations to enable simpler, less regulated advice. Both approaches will be important.
The RDR was a big deal but, the stakes are higher now because early indications are that the pension freedoms are leading to a world where millions of normal people will drawdown from their pension assets. The ABI numbers for the first two months since the new rules came in showed a market split in half between annuities and drawdown plans. We better not mess this up for the grandparents!
Finally, today is your last chance to benefit from the early bird discount for Platforum 2015 – The Retail Investment Conference. For more information and to book click here.
UK Fund Distribution Guide
The launch of D2C select lists from Barclays Stockbrokers and TD Direct Investing highlights their strategic significance. Subscribers to the Platforum UK Fund Distribution Guide will receive their next update next week which analyses the dozen D2C select lists that are in the market today and how they are compiled.
If anything, these lists have a wider range of funds on them this year although some blockbusters, like First State Asia Pacific Leaders, appear on almost every one. Unsurprisingly the likes of M&G, Fidelity and Jupiter are topping the list of inclusions. The view of star fund managers varies among the fund selectors with some wanting to be seen picking the rising stars with others more bullish about the old guard and Woodford Equity Income is already included on eight lists.
Hargreaves Lansdown and Fidelity Personal Investing continue to secure the lion’s share of discounts on funds included.
For further information on subscribing to the Platforum UK Fund Distribution Guide please contact: juan@platforum.co.uk