It wouldn’t be year-end without the requisite predictions. This is our third year offering up predictions on retail investment distribution in the coming 12 months. As for our predictions for 2016, we have a spotty record.
For example, we predicted platforms would take on asset management capabilities, that robo would continue to be a hot topic, that we’d get clarification on advice versus guidance and that a bank would develop a compelling proposition to convert savers to investors. While we got a few things right, we were flatly wrong when we forecasted the first female CEO of a UK platform. And there hasn’t been major cyber attack on a platform – at least, not that we know of!
Below are our predictions for 2017. Before we sign off, we want to thank you for your custom, opinions and all that you have done to challenge us to think differently about the industry, your businesses – and indeed our business too. Happy Christmas and all other holidays this time of year. We look forward to working with you in the new year.
Heather Hopkins, Research Director – @heatherahopkins
The lines between asset manager, adviser, platform and DFM will continue to blur. Price pressure will be felt across the value chain with fund managers, advisers and platforms all feeling the squeeze. Firms will experiment with managing pooled retail assets outside of the OEIC wrapper. The FCA will flex its regulatory muscle in the hotly anticipated Asset Management Market Study final report. The share of retail fund sales through financial advisers will decline as D2C investing finally picks up pace.
Jeremy Fawcett, Head of Direct – @jfawcett
Hargreaves Lansdown’s hegemony will survive, but will be rocked by, the challenge of four key moves by competitors: 1) Barclays’ new integrated online banking and investing proposition, 2) Interactive Investor’s fixed price model offered at scale following the acquisition of TD Direct Investing), Vanguard’s D2C launch and 4) Nutmeg joining the establishment as they move beyond the £500m AUA mark.
Miranda Seath, Senior Analyst – @SeathMiranda
Platforms, large advisory businesses and adviser networks will use their buying power and insights on their customer data to give fund managers specific mandates to develop appropriate investment solutions for their investors (whether model portfolios or multi-asset funds). Platforms and advisers will expect fund managers to offer institutional pricing.
Rodolfo Crespo, Senior Analyst – @crespoRodo
Good news in 2017 for UK asset managers, who will be granted post-Brexit fund ‘passporting’ rights and access to the EU single market. Once the French and other European elections are over, new European governments will push for a different model for the EU. We will also see some smart platform consolidation in continental Europe together with the launch of new D2C platforms as DIY investing burgeons in the run-up to MIFID II.
Peter Mann, Consultant to Platforum – @lusitanoseven
I predict that 2017 will be the first year when 100bn of new assets flow into retail platforms.
Danby Bloch, Consultant to Platforum – @danbybloch
The Lifetime ISA will be a success with investors – contrary to the view of some advisers and providers. The 25% subsidy (equivalent to basic rate relief) will prove irresistible to people saving to buy a home – especially if they are backed by the bank of mum and dad. Even the relatively small market of 30 to 40 year olds on track to exceed their lifetime pensions allowance will want to take advantage of its extreme tax efficiency.
Rawle Calder, Senior Account Manager
In light of recent acquisitions, I believe some businesses will see value in M&A and further ‘smart consolidation’ will occur. Platforms – whether direct or adviser – will be investing in service and watching their competitors closely to see which new propositions and services play well with clients.
Arun Shrestha, Senior Quantitative Researcher
I predict that in 2017, D2C propositions will really focus on their mobile offerings to end investors. App development and improving the mobile optimisation of websites will continue to be a focus but more D2C propositions will improve mobile functionality by enabling investors to trade on their phones.
Andrew Ashwood, Research Associate – @Ashwood47
Following on from the FCA’s strong pro-passives message in the recent asset management market study, I predict that there will be increased pressure placed on annual management charges but a continued unwillingness to budge from fund managers. We will continue to see strong flows into passive funds and ETFs on-platform but active fund managers will still justify charging a ‘premium’ price for a ‘premium’ product, much to the dismay of the regulator.
Gemma Sindall, Sales and Marketing – @gsindall13
Customer-centric product and business strategy will continue to develop across our industry. From a Platforum perspective, this will consist of the most relevant and insightful research, delivered to subscribers through new and engaging channels and in the most effective way.