Guest Blog: 2017 The year of the jetpack
So it’s a treat to have the chance to write this for all the fine folk using James Hay Partnership and their Modular iThings, and very good they are too, I expect.
The nice lady who asked me to do this said you might like to read about thoughts on what the platform market might look like in 2 or 3 years’ time. And with all the hoo-hah about direct platform pricing at the moment (and if you don’t know the lang cat, we spend a disproportionate amount of our waking hours analysing platforms and their wily ways, including price) it might be useful to think about how the market might split between direct and advised worlds.
So, it’s 2017. What’s different? Have we self-actualised and turned into unwavering beams of pure energy? Is auto-enrolment a massive success? Where are our jetpacks?
In platforms, though, I think the world moves much more slowly than we think it will. Ideas take time to get through governance committees (which are exactly as dull as they sound), then stuff needs coded, built, integrated, tested, released and improved before it really takes off. So don’t be surprised if life isn’t that much different where your platform is concerned. But within that I think there are a few areas which might be on the march:
1. User interface design – oh dear, most of this industry SUCKS very badly at this. Now, some of that is to do with providers needing to provide you with a lot of flexibility; with flexibility comes complexity and there’s only so much you can do about that. Notwithstanding this, I think now that we’ve pretty much got the basics of platforms conquered, attention can swing to what it’s like for the poor souls who have to use them. I’m hoping to see some considerable improvements in usability. Feedback from users is crucial for that – so keep on at your platform suppliers and don’t keep quiet about things that bug you, even if they’re little.
2. Restriction – currently platforms offer you the world on a plate, which is kind of fun. But if having the ability to access Uzbekistani yak futures is not high on your centralised investment proposition agenda, why complicate life? If advisers do have well controlled, simplified, centralised processes, the platform needs to enable that, and (arguably) only that. It’s like carving a statue – you take away all the bits that don’t look like your proposition and what’s left is a perfect fit. I think platforms will try to get better at that.
3. Charging – yes, it’ll come down. More platforms will try to escape margin pressure by building new structures to allow you to access proper institutional share classes (so much better than clean or superclean) or go down the Skandia route and develop sub-advised mandate structures. They won’t manage to escape that margin pressure, by the way. Headline rates might stay the same, but the nibbly extras will fade away, we’ll see caps in place and probably more hybrid structures which mix and match fixed and percentage based charges.
Some of those changes – in fact all of them – may well be driven by the direct market. We’ve seen big leaps in design over on that side – just check out Nutmeg if you haven’t already. On restriction and guided architecture – well, hate it as much as you like but the HL Wealth 150 and 150+ isn’t going away and remains hugely powerful with investors. And charging already on the direct side is far more developed and nuanced than on the advised side. There’s a ways to go, but direct platforms will be hugely important.
I expect a decent chunk of the market to start self-serving and using advisers just for planning. After all, if you’re a basic accumulator in your 30’s with a pension and an ISA, how much looking after do you take? It’s all in the plan, unless you fancy yourself as an investment picker.
So there you go. Someone said to me recently that platforms will stop being a thing, because they’ll just be how financial services happens. I think that’s a lot further out – maybe 10 or 15 years.
And whatever happens, you’ll still be here, as will we. See you then.
Any opinions given are those of the individual writing this blog and not necessarily those of James Hay Partnership