You may recall last time round that I used this column to make some predictions. Our annual adviser census (State of the Adviser Nation) was live in the field at the time and I played Mystic Meg1 by guessing some of the headline results.
Well, we're delighted to say that 404 members of the advice profession gave us a big chunk of their time and after doing our thing with the data, it's time to revisit some of my predictions to see how I got on.
Shy and retiring
We'll win precisely no awards for stating how important the in-and-around retirement market is for the health and wellbeing of the UK investment market. But if we're sure2 that the majority of accumulation (another stupid phrase) business is transacted via Centralised Investment Propositions, we're less sure that this money pivots away to a new suite of investment ranges when customers start taking their cash out again.
When asked about a centralised retirement proposition (CRP), the majority stated that there was no real change in the investment vehicles used. Instead, it was all about having a different set of processes. I reckon a year is too short a length of time for such a complex issue like this to shift.
Our survey says3
When asked "Would you describe your firm as having a centralised retirement proposition (CRP) for clients in or at retirement?"
- The pattern of respondents clearly shows that while the (slight) majority of our respondents do operate a CRP in some form, only 11% regard it as purely investment based. i.e. pivoting away to a new set of investments. Of the minority, a big chunk are still actively thinking about what to do.
- A CRP then, in the main, seems to be more about process than investment: realigning and managing client objectives as opposed to switching into new investments. This rings true with what we found last year.
So far so good. Onto the next one…
You need educating
I talked last quarter about trust in the sector and how the financial services profession struggles to build a level of confidence amongst customers. Now, I can't help but get the feeling that perpetual press focusing on that fund from he-who-shall-not-be-named combined with the alleged absence of value from the biggest advice network in the land hitting the mainstream will have the biggest impact here. However, one thing that came through strongly from our previous census in the context of improving the perceived value of the sector was the need for financial education in schools.
This year, we're presenting people with a range of statements in the context of the advice gap in the UK. One statement proposes that financial education would help people realise the benefit of financial advice. My prediction is that this will come through strongly again, despite this being a topic of fierce debate and despite me not being sure if I agree with it.
Our survey says
Our respondents told us that:
- A whopping 74.5% think that a lack of financial education in schools is a real and significant issue. 3.4% think it's either a minor or not an issue at all.
- Compare this to the St James' Place mainstream media coverage and the furore over the Woodford closure where only 20.8% and 35.7% respectively felt those were a real and significant issue.
So, this is one instance where my prediction was right even if I don't particularly agree with it. Such is life! We move on…
Spread some reputation
With 25+ platforms in the sector to assess, advisers aren't exactly spoiled for choice. But what fascinates me is the relationship between the tangibles (such as who offers what functionality point) and the intangibles (market momentum & reputation etc.). Each firm will have their own unique blend of philosophies & practises that will ultimately influence who they are likeliest to partner with and that reasoning (FCA look away now) will be rooted in psychology on some level. We're keen to assess this year on year by asking respondents – irrespective of whether they have any history of using a platform – to get them to rank their gut instinct of the reputation of each platform in the sector.
…my prediction is that overall mean average scores will have reduced year on year. I think there are pockets of success in the sector (AJ Bell and Parmenion are flying, Transact are Transact, Aviva are recovering) but by and large it's been a tricky old year. Naturally, I hope I'm wrong with this one.
Our survey says
Time for Steve to take his first stroll down Incorrect Avenue as our research shows that:
- Mean average scores have increased for the sector.
- The biggest winners have been Transact (ticking along as Transact does), AJ Bell (arguably the biggest momentum in the sector), Zurich Intermediary Platform (perhaps the Embark deal has given it some certainty) and Nucleus (forever the darling of parts of the platform sector).
Elsewhere in our census we asked about what respondents thought about the change in reputation over the year of certain parts of the sector (such as the advice profession, active management as a discipline etc). Only 13.3% said the platform sector had got a bit worse with 2.8% stating that it had got much worse. Over half (57%) say it's much of a muchness with 1 in 4 saying that if anything, it's got a bit better.
There's a lesson in there, I think. The platform sector is oft maligned, filled with tales of re-platforming woes, servicing issues & potential consolidation but behind the noise, it's worth listening to those who use them day in day out.
So, there we have it, a very quick tour of some of the highlights of our recent research. It's only a tiny subset of the bigger piece. If you'd like to find out more, get in touch.
See you next quarter.
- I refuse to update my cultural reference points.
- And we are. Our research consistently shows that >80% of money flows through Centralised Investment Propositions.