Direct platforms - all the rage since the start of the year - need not be seen as the enemy by advisers. In fact, quite the contrary, writes Mark Polson...
I've been doing lots of analysis of direct platforms recently. Well, it beats having to interact with real people. As I've been burfling around, checking out pricing, 'superclean' fund deals and all the rest of it, I've found a great deal of interest from advisers.
This interest falls into two camps. The first camp is a ‘know your enemy' camp. Advisers holed out here see every direct client as a loss to them, and the direct platforms as a big sort of platformy monster thing which is only interested in eating their lunch. They are often a bit angry.
The second camp is a bit more measured, and has started to think about how to accommodate different kinds of clients in a post-RDR world.
This camp is aware that the unwillingness or inability to pay adviser fees or charges is not necessarily a sign of genetic weakness, and indeed might be quite a valid preference. A young professional, perhaps, with simple needs in protection and an ISA or two; a member of their employer's pension scheme and no magical inheritances from Auntie Mabel to catapult them into a bracket which makes them economic for beleaguered advisers.
Far better for these clients to pay for a plan; perhaps subscribe to a healthcheck service; get a risk profile done and then execute the plan themselves on a direct platform, than to do nothing or drift into the clutches of those with other interests at heart.
The value for these clients is in the plan and the conversation; not necessarily the ongoing investment monitoring.
As it happens, I think there's lots of innovation happening in the direct space just now. In only a few weeks of pricing announcements, there is already more nuance and variation in the direct market than the advised. Price caps are common. Fixed fees are the choice of many. User interfaces are - imperfectly just now - being streamlined and simplified, and visual presentation of portfolios being made more impactful.
It strikes me that, handled correctly, direct platforms can form part of an adviser's armoury.
In this online age, clients may choose to transact in lots of different ways at different times for different reasons. If forcing people to fit into a neatly-shaped box is not your thing, keeping up to speed with the direct space and being ready to engage with clients who use them might form a useful second string to your main service.
And a client who starts off this way, valuing your assistance and planning chops might well, in the fullness of time, turn into your next generation of wealth management clients.
Mark Polson, as we hope you may know by now, writes loads for Professional Adviser and IFAonline.co.uk, all of it first rate. Catch all of his articles, from technology reviews to blogs, right here. Oh yes, and he also founded a little something called the lang cat.
What made financial headlines over the weekend?
Q2 net sales dropped almost 50%
‘Important to have an anchor’
Lack of innovation for solutions