Still greater threats may be coming from across the pond. Vanguard is rumoured to be bringing its Personal Advisor Service across from the States, with a commensurate squeeze on platform, advice and asset management margins even further. The lang cat report says: “0.3% all in for advice, platform and asset management is the ticket price in the US. Even twice that in the UK could be a real game changer.”
In this environment platforms need to address their weaknesses and Mark Polson, founder of the lang cat, says that platforms are still missing some of the basics. He says: “Some platforms have no ability to record a goal and then track a portfolio against it. Most financial planners would like this functionality and it feels like it should be a core competency for platforms. Yet very few offer it.”
He believes that the consumer experience needs to be much better in many cases, adding: “Platforms now have £330bn in clients’ money and need to crack on to the next level. There are pockets of brilliance in the sector – True Potential’s Impulse Save functionality, for example, is really well done – but as a whole, it needs to move beyond its current level.”
The report adds: “There is an urgent need to improve back office systems and processes to drive costs out of the business. Equally urgent is the need to improve adviser and customer online propositions. In several cases a platform’s customer portal requires you to use a PC with Internet Explorer, and even then you can only get a valuation. Nothing else.”
Polson says that some of the data suggests average platform users may have far smaller net wealth than initially expected. He says: “This means that many systems may have been over-engineered, and in fact, need to cater more directly to the mass affluent.”
The report concludes: “We see a market that could and should be doing so much better, but which at the moment is struggling. This worries us. When the largest player in terms of AUA (Cofunds) has just reportedly tried and failed to secure a buyer questions have to be asked about the sector as a whole.”
These are more difficult times for the platform industry. Only those that prove themselves adaptable and innovative will survive.
