Martin Jennings, newly-appointed managing director of Axa Elevate, says the RDR and platform debates are now less about value and more about price, price, price...
Q1 Lawrence Gosling: I would characterise the transformation that is going on in the industry, with the run-up to RDR and the development of platforms as being almost like an industrial revolution. How does it feel from your side of the business?
Martin Jennings: Yes, I think it is like an industrial revolution at the moment. I think everything is up in the air. Everything from product manufacturing, to traditional providers, to IFAs and to consumers is going through an element of change. Should IFAs use one platform or many platforms? I think it does feel a bit like an industry revolution, we are probably ripe for one.
People are now starting to think about things differently and to look at different ways of building and packaging those products. The platform is sitting there as a service layer, which is giving people access to underlying investment vehicles.
Gosling: So you think the understanding of the role of a platform has moved on from it being just simply a technology solution? We don’t hear people talking so much about fund supermarkets any more – the generic expression we are all using is platforms.
Jennings: Fundamentally the platform is there to provide a service to facilitate the purchase and provision of the product. The product is the underlying investment and the platform is effectively the enabler, to help the adviser deliver their offering to their client.
Gosling: We talk about platforms as being service providers, just exactly what do you mean by that? Historically the industry has been about pushing products on to the adviser, the distributor, who then sells it on to his client base. You are really talking about moving to a more mature business relationship aren’t you?
Jennings: Yes, very much so. When providing a service, the relationship changes from one of ‘I am not broking your product, I am now using you to power my business and I need a different relationship with you. This means I need a different level of services from you than I have had before’.
Moving the relationship from transactional to partnering means we can start to bring some of those added value support services. This isn’t about functionality it is about what both parties can do to bring value.
Gosling: So that’s really you as a platform provider beginning to understand more about what the adviser needs.
Jennings: Very much so. As I said, the client/adviser relationship is the critical part here. I think in years gone by, we would have built that product, we would have explained why it was good, why the features were more rich than our competitors and why the charges worked better. We didn’t get as involved in that relationship between the adviser and the client. Moving forward, we are getting more involved. We are not giving the advice, clearly, but we need to help our customers, advisers in the round, deliver their future service proposition for their clients.
Gosling: Now a lot of the debate in the industry is all about price, price of the service, price of the products. Do you feel in a sense that the whole price issue has overtaken a lot of the fundamental issues behind the provision of good advice to clients?
Jennings: Yes. The original outcomes that were set for RDR were about provision of financial advice and better quality financial advice for clients. Unfortunately the debate has centred on price, price, price, and no aspect of value.
This is disappointing because I think there is a fundamentally different thing between price and value. If there wasn’t, I don’t think iPhones would sell in the masses that they do. Clearly they are a value proposition, they give you something that the other handset doesn’t give you, that is more functionally rich. So there is a fundamental difference.
I think the other aspect that we need to look at here is the total cost to the customer. That has to include all aspects because we are managing people’s money here, we have to make sure that total cost is appropriate to the service and value they are getting.
You can listen to the whole interview on www.ifaonline.com
Industry compensation scheme refuses to cover it
No-deal Brexit will cause 'a tremendous shock on the UK economy'
‘If our people are the best they can be, then so is our service’
Asset managers must make changes
Follows exit of Hamish Purdey