This week, @heatherahopkins reviews the Platforum team’s predictions for 2015 — where we hit or missed the mark.
While each of the last 365 days seems to have whizzed by, looking back it feels like a long time since we wrote our Platforum predictions for 2015. Since that blustery day last December, we have seen the arrival of the pension freedoms, two budgets, a Tory majority, Grexit has come and gone and the markets appeared for a while to be in a tailspin. And of course we’d be remiss not to acknowledge tragedy and violence weighing heavily on everyone’s psyche.
This year has been a journey for me personally. When we wrote our Platforum predictions twelve months ago I was a mere eight weeks into my role as Research Director. We are pleased with where we’ve finished the year – the business has grown and we continue to expand the scope of our work.
In this week’s email, I thought I’d hold us accountable for what we said last year and next week each member of the team will publish fresh predictions for 2016. Our predictions ranged from more investment in digital to more innovation in D2C and to pricing pressures on fund groups.
We said that platforms would be looking to ‘clean’ their books ahead of the 2016 sunset clause and some IFAs would not be ready for the clean world. This week’s adviser reaction to SLI’s move to scrap all commissions proves the point!
I’d be overstepping to suggest that we somehow predicted how much hype there would be around the robos this year, but we did say that that the focus would shift from start-ups to corporates and we’ve seen that happen in both the US and the UK. Charles Schwab trumped many of the newbies with their robo-proposition and BlackRock have acquired Future Advisor. In the UK, Fidelity is investing heavily in guided journeys, LV= launched a robo advice proposition aimed at the workplace and Aberdeen partnered with Hymans Robertson and acquired Parmenion – both firms with nice digital engagement layers. We hope to take the conversation about digital engagement forward at our Future of Digital Engagement event in June.
We predicted innovation in light of the pension reforms and I will be honest and say that we are all a bit underwhelmed with drawdown propositions. However, with an 18 month product development timeframe, perhaps we were simply too ambitious. Watch this space!
One sage among us predicted that advisers will increasingly turn to providers, platforms and DFMs to design portfolios structured for drawdown. Eminently sensible, but not sure that the providers, platforms and DFMs are delivering. Demand is there but there are some hurdles. We continue to see investment in this area.
We predicted the rise of banks and life companies in D2C and different plays on the market than the incumbents. We are seeing glimmers of innovation here, but proposition development takes time. Some plans to offer simplified advice or a guided journey were put on hold for the FAMR review, although many did launch new ‘investment solution’ offerings. We are eager to see what Aviva, Barclays, BlackRock, Santander and Vanguard do in the D2C market in 2016. In the meantime, Hargreaves Lansdown has 35% market share among direct platforms.
Finally, we predicted continued pricing pressure – in particular on fund managers. While the fund groups moan about the pressure on fees, we haven’t seen a slashing of prices. Nor have we seen stronger take-up of passives or smart-beta. We are however seeing model portfolios increasingly use passive investments as a component as a result of fee pressure on MPS.
The Platforum team are feeling the pressure of next week’s prediction-packed email. And we welcome your suggestions for predictions. Tweet yours to @theplatforum using the hashtag #platforumpredicts . We’ll point to some of our favourites in next week’s email.