Mark Loosmore of AT8 Group visited Fidelity and confesses to being caught a little off guard.
Fidelity launched FundsNetwork back in 2000 and along with Cofunds and Skandia it is one of the three big fund supermarkets that still lead the market by a big margin in terms of the Assets Under Administration held on their platforms (Fidelity FundsNetwork now has £35.1bn AUA). Given Fidelity’s heritage and time in the market we expected to see a functional but slightly dull and ageing solution, however, we were mistaken.
Fidelity openly admits that it had begun to fall behind the market in the functionality of FundsNetwork, but after significant investment in the past couple of years this appears to have been turned around. Several new services such as bulk switching were added last year and several further releases are planned throughout this year, including a new Portfolio Evaluator.
One of Fidelity’s key differentiators is that it has four business models supported by one underlying Platform. It has Fidelity FundsNetwork, which supports financial institutions to deliver their electronic fund-based services, it has a workplace/employee benefit service and a Direct to Consumer (D2C) offering too. Having a wide source of revenues for Fidelity’s platform provides a substantial research and development budget and has enabled accelerated development over recent years.
The Workplace offering has some very clear benefits to IFA firms that have a corporate presence and through its introduction Fidelity can facilitate effective trading by employees of large companies.
Workplace investing has promised much in the market place for many years yet the benefits have been slow to materialise. Through the launch of products like a workplace ISA, this is beginning to change. Julian Webb, head of platform sales and head of DC business at Fidelity, said a number of factors were changing in the market that was seeing demand for its Workplace offering – particularly its Workplace ISA – increase.
The confirmation of the £50,000 pension contribution limit has led to the wealthier employees seeing a value in using Workplace ISAs to supplement their pension funding while younger employees welcome the flexibility of having an ISA over a pension.
The direct to consumer offering has caused a lot of comment in the market. Many of Fidelity’s competitors will point out that while they themselves may have D2C functionality, this is always delivered through an IFA, rather than being competitive. This support and loyalty to the IFA market is commendable and does help form a trusted bond between platform operator and adviser but it loses some of the benefits that the Fidelity proposition has and that were clearly demonstrable during our visit.
The direct to consumer experience clearly has improved the usability of the solution and equally important, has increased Fidelity’s engagement with the consumer. The guidance tools are clear examples of functionality that has been built with the end consumer in mind and were more engaging than many other tools we have seen – almost ‘Apple-esque’ in their form and function. However, it should be pointed out that the more engaging tools we saw were the simpler type that are designed to help engage a client, but that, in themselves, might need to be supported with more in-depth specialist planning and advice before committing to an investment course of action.
Paul Bruns and Elaine Parkes
3,000 left to transfer
Record numbers of people aged 90 plus
From 3 to 10 October