Larger firms are increasingly able to create their ‘own’ platform rather than simply white-labelling a retail offering, and this gives them the ability to control charging structures, among other things.
I don’t think this is a problem. Advisers should be absolutely at the centre of what’s offered to the client, but individual advisers in those firms must still be free to recommend what’s most suitable for their client, irrespective of whether it’s the bundled, in-house option or not. Whether this is better for clients depends on the total cost of ownership, and how suitable the platform itself is.
The form of charges is interesting, but we can’t make a case conclusively one way or the other until it’s demonstrably true that investing via one of these offerings is significantly less expensive on a like-for-like basis than through an adviser using a retail platform. I think the potential for that is there, but we’ll have to see whether firms really do pass on lower costs, or whether they use economies of scale in the platform side to fatten their own margins.
DIY pioneers
Even this model isn’t all that disruptive: it’s just one link taken out of the chain. More interesting still are those few firms that have gone the whole hog and built their own systems from the ground up. For my money there are two leaders in this space, one of which is well-known and another that is a bit of a well-kept secret.
Benchmark Capital, the tech firm behind the Best Practice network, is the well-known one. Ian Cooke, the Tazmanian devil-like force of nature behind that business, famously couldn’t find a platform or a back-office system he liked, so he built one of each and linked them together. The results are Fusion Wealth and Enable, which have ended up being genuinely credible in their own right. Incredibly, the two-way real-time integration between them remains unrivalled, even by back-office firms like Intelliflo, which pride themselves on their integrative approach.
Fusion currently has around £5bn AUA, and with the backing of a recent investment from Schroders it looks well set for the future.
The secret lot is a Scottish adviser firm called Save and Invest (S&I). Its proprietary system was built by one of the guys behind Touchstone and integrates customer relationship management, workflow, product administration and investment allocation all in the same piece of kit.
S&I advisers work within recommendation parameters built into the system, which are designed to give suitable outcomes without being completely ‘cookie-cutter’. Compliance checks and referrals are built into each case, and the whole business effectively hangs off the one piece of software, which means everyone from advisers to administrators become adept at using it over time, driving efficiency and all that good stuff.
