Our tenth annual conference, Platforum 2016, is now behind us. We thank attendees, sponsors, speakers and the conference chairman, Peter Mann. Many fascinating themes emerged throughout the day; I want to pick up a few.
Fee pressure
I raised fees in my opening remarks (referring to the optimum price point for financial advice). The topic came up in every session. David Ferguson from Nucleus noted that shifts in charges have been unevenly distributed in the value chain. Platform prices have come down but fund management fees remain relatively unchanged.
There were calls for platforms to charge a flat rate rather than ad valorem. And speakers disagreed about who adds the most value to the customer – mainly arguing from their own narrowly interested perspectives. But most people agreed that advisers, being closest to customers, probably have the least to worry about in the short term.
Related to fees, there was debate whether DFMs add value or if they’re simply another “snout feeding at the trough” (as one attendee colourfully put it). Several questions from the audience challenged the value that DFMs add and whether multi-manager or multi-asset funds might not be more tax and cost effective.
Of course cheap isn’t necessarily better. In response to a question about why platform fees don’t come down to 10 bps, David Tiller of Standard Life replied that it might be possible get a platform that just trades funds for that level of fee, but it would be without the tax wrappers, client reporting and other services.
We agree. There is a trade-off between low price and the service and support clients and their advisers receive.
You can’t put advisers in a box
Categorising advisers and advisory firms is hard, turned out to be the view of both audience and panellists. We presented some of the FCA’s personas to represent different customer profiles, but attendees felt it would not be possible to create similar categories of advisers.
The very language we use to describe our industry doesn’t help. Panellists argued that terms such as outsourcing, insourcing and bespoke fund picking are unclear. This in itself makes understanding and segmenting advisory businesses difficult.
We hope to help bring some clarity to this issue next year in a new series of research reports about the composition and structure of the advisory market.
Retirement: get them hooked from a young age
The consensus among financial advisers at Platforum 2016 is that their clients are mostly aged 15 years either side of retirement. Government policy changes aren’t designed to incentivise this group to save more; after all, they’re already well off.
In our stream for providers, we noted that DB plans will continue to provide a larger share of retirement income than DC plans until about the year 2042. Those over age 50 are probably in good shape (or it may just be too late to help them, alas).
Richard Goodall from Parmenion introduced us to
target=”_blank”>Go Henry, a cash card service that can help parents teach their children about managing money. Government policies being introduced now will help younger savers and investors. We have time to get policies in place to encourage the next generation of investors. Tom McPhail of Hargreaves Lansdown implored the audience to engage with regulators: take them your proposals and ideas, he pleaded.
The known and unknown
My colleague Jeremy Fawcett and I shared some Platforum Perspectives on changes in the retail investing industry. If you missed the event (or want to hear the double-act again) you can see a summary of our views here.
The event ended with a look at the ways artificial intelligence is changing society, business and financial services. Whether robo-advisers will turn into terminator robots that will destroy the human race, as Kenneth Cukier of The Economist suggested (in jest), is still not known.
What is certain is that we look forward to seeing you at next year’s event. A theme has already been proposed: “Another Year of the Customer.” We may be onto something…