As traditional wrap platforms grapple with re-platforming and the Financial Conduct Authority (FCA) begins to probe the competitiveness of the market, Tom Ellis spoke to one newcomer to see how they are doing one year on from relaunch...
Growthinvest rebranded and relaunched in October last year as the place for advisers looking to consolidate existing tax-efficient investments into one place.
The independent platform was originally set up in 2012 by financial advisers under the name ‘Seed EIS' [Enterprise Investment Scheme] and catered to a select group of advisers and wealth managers. Since its relaunch to the wider adviser market one year ago in October, a few more features have been added.
As well as helping advisers onboard all of their clients' existing tax-efficient investments, Growthinvest now offers venture capital trusts (VCT) from across the sector and select tax-efficient qualifying single companies, as well as its own discretionary managed portfolio service that invests in EIS and seed EIS-qualifying investments.
Moving forward, Growthinvest is looking to add EIS offerings the same way it has done with its tax-efficient sibling, although this could prove a bit trickier, according to managing director Daniel Rodwell.
"It's very intricate and everyone has different models so it's taking a bit longer than you might imagine," he said, "but in the next six months we want to offer something that can be seen as whole of market from that side."
Growthinvest has more than £50m of assets under administration spread among 5,000 direct clients and 500 intermediary firms.
The platform may owe some of its early success to the timing of its relaunch. VCTs had their second-best year on record in 2016-2017, with around £550m invested in the sector in the tax year - a 18% year-on-year increase.
But Growthinvest also benefited from the effect the pension freedoms had on the market and the changes to the annual and lifetime allowance rules.
"With the changes to pensions we thought advisers would look at more solutions for the top end of their client base," said operations director David Lovell. "We've definitely seen a realisation from advisers that VCT and EIS have a part to play."
The small firm uses its own technology to power the platform, which it develops and upgrades in-house. But this does not mean it does not make the most of other pieces of technology as well.
The platform bolts on functionality from external providers to improve the analytical features it offers clients.
"Over the last couple of years people have gone from being impressed by a pie chart on their bank accounts to being interactive and clickable," Lovell said.
"We're not going to be able to compete in-house with the sort of market leading analytical technology they're expecting to use when they're looking at their VCT and EIS portfolio. What we've done is make sure we've got open architecture so we can plug-in external charting and analytical software."
He added: "In the wider marketplace all tech is becoming much, much easier to integrate together. Those that produce technology realise that to be successful across the wider marketplace they need to think about how people can move to their tech and how it might integrate with existing systems."
Perhaps traditional adviser platforms can learn some lessons from Growthinvest's approach to running an "open architecture"-style platform.
As Professional Adviser revealed in our Re:platforming series throughout the summer months, half of traditional adviser platform assets - more than £220bn - are currently on the move as many undertake re-platforming projects in an effort to develop and keep up with technology.
For Growthinvest this is not on the cards. And the firm is certain it will not have to worry about re-platforming any time soon.
"Re-platforming [of traditional adviser platforms] is a universe of so many assets and so many different price trading points - it's just a behemoth of data," said Rodwell. "Whereas ours is much, much lower latency, much wider re-evaluations, smaller portfolios and a smaller number of clients.
"For us to scale to where it becomes hugely significant in terms of the market itself, the actual requirement from a tech perspective doesn't even touch some of the other platforms."
However, Growthinvest is still observing consumer behaviour, and being a smaller beast compared to the traditional platforms will not stop it from looking for inspiration in that market. Neither will it take away its respect for how those trailblazers have changed the game.
"We're looking at the functionality advisers have become used to," said Lovell. "The traditional fund and pensions-led investment platforms have transformed the way advisers do business over the past 20 years.
"We don't have a multi-billion pound technology research and development budget, but we're taking our experience and feedback from the adviser world and bringing that together so we can start offering a proper solution that's scalable and flexible into the tax efficient space."
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