I spoke at Fund Forum in Monaco two weeks ago, and having spent last week catching up, I was looking forward to writing a more detailed review of my presentation and the report on which it was based today. However, my plans were thwarted by an FT article that — at best — took some lines out of context and at worst, inaccurately reported parts of the report. How they got their hands on the report is also questionable since it wasn't circulated to the press and the FT didn’t buy it.
Our quarterly Platform Report was published a couple of weeks ago. It’s popular with platforms and fund managers as it allows them to benchmark themselves and monitor overall trends in the platform space.
Some platforms are reluctant to share their quarterly figures (sales and asset growth), so the report is confidential and circulation is restricted. We release headline industry figures to the press and throw in the top three platforms for assets, asset growth, gross and net sales. However, the large multi-proposition platforms can often obscure developments in certain areas of the industry. As a result, we also analyse platforms by their different propositions, which include fund platform, wrap, corp/DC, institutional, sub-advised and D2C. Some of the proposition breakdowns are estimated, but we try to get as much guidance on our estimates as possible from the platforms themselves and from their competitors.
It’s been very busy in the D2C platform world and competition is hotting up as the April deadline for unbundled platform pricing approaches. Hargreaves Lansdown was the first to announce its post-RDR charging structure and was followed by Fidelity, Barclays and a host of other discount brokers and direct platforms in the days and weeks that followed.
The rain has stopped, the sun is shining and it feels as though we’ve got through the worst of the weather. It’s half term so half of the industry is away and so it’s been a quietish week. We Fundscapers were bogged down in our various quarterly/year-end reports until Old Mutual gave us something to think about.
The group announced its new solution two weeks ago, but it was only today that it published the details of the WealthSelect fund range and the AMCs. There are 20 sub-advised funds from 10 fund managers. Being a bit of a nerd, I added up them up and worked out that the average was 58bps and not 52bps, so I can only assume that Old Mutual funds have also been included in the 52 bps calculation.
In theory, everyone’s a winner. Advisers get access to a balanced fund range at cheaper prices. Check. Fund managers get distribution in exchange for lower AMCs. Check. Old Mutual can use fund revenues to offset platform costs. Check.
For those of us forced to get round London in the awful weather and no tube network, what a nightmare week! On the financial services front, it was fairly quiet until Old Mutual Wealth announced its new fund range and portfolio management service yesterday afternoon and then the twitterati got busy. Old Mutual Wealth includes two separate businesses — the Skandia platform and Old Mutual Global Investors (OMG), the fund manager arm.
Prior to RDR, the platform was able to wrestle some pretty good rebates out of fund managers, but in the post-RDR world, securing the same kind of pricing from fund managers was likely to prove a challenge unless the platform could demonstrate that it had distribution influence. But even more important was securing distribution deals for its in-house fund manager, OMG. As a result, a combination of the Skandia platform plus a range of well-priced, sub-advised funds and solutions targeted at cost-conscious advisers became the strategy. The message is clear: we are a one-stop shop for restricted advisers.
January is usually an austere month. After the Christmas and New Year festivities, not only do we have far less money, but it’s also becoming the norm to give up alcohol for the entire month. Add to that our (mostly) unrealistic New Year resolutions to get fitter, get richer, and get better at a variety of things and January becomes a very tiresome month.
It's Friday, it's nearly Christmas and try as we might, it's difficult to sit in the office with Christmas just round the corner. So we're off for the afternoon. We're very unlikely to be back before the New Year , but we will be keeping an eye on our emails just in case you have a pressing need to communicate with us. Before we go, we'd just like to say Feliz Navidad:
It's that time of year and there are a multitude of Christmas dinners, drinks and crimbo catch-ups going on throughout the city that I like to call reinbeers (geddit?). So much so, that there's barely any time to do any work. We recently put to bed our Platform Report and our Distribution Report, and although we'd like to start winding down and enjoying the festivities, work has already started on our five-year projections that will be featured in our Q413 issue of the Platform report.
A number of platforms have already contacted us asking for our numbers and our views. The direction of travel is clear and has been since before RDR so we're always a little nonplussed by the number of 'stating the obvious' articles that end up in the press. In the last few weeks there have been lots of stories on the advice gap (yes it exists, and yes, if advisers orphan their clients they end up in the hands of St James's Place, which is, surprise surprise, growing rather rapidly); fund managers offering lower rates in exchange for for distribution influence (and not distribution facilitation) and of course Hargreaves testing the waters with various pricing options that eventually came to nothing.
It's November already and the pressure is on with our two quarterly publications, the Platform Report and the Distribution Report, due out in the next couple of weeks. Not that the work hasn't been ramping up already. Last week I was up in cold, but sunny Edinburgh for Matrix Solutions' annual Financial-Clarity conference, and yesterday the same seminar was held at the Shard in London, so prepping for both has taken some time. You can find a link to my presentation here.
We're in the midst of data collection for the Platform Report. There are always one or two late submissions but the half-term holiday has thrown us off course a little. We're hoping that we can recover lost ground and publish the report as expected on 6th November, but it's looking unlikely.
It's been an exciting week in lots of ways. Firstly, there was the announcement that Neil Woodford is leaving Invesco Perpetual next year, and that his funds are to be managed by Mark Barnett. The industry reacted with immense shock and I suppose that after 25 years, Woodford was very much an integral part of the furniture. But to a certain extent it was also unsurprising — in a world where fund managers jump ship on an all too regular basis, it was just as surprising that he hadn't gone to another fund manager, or started up his own fund group years before. The difficulty that Invesco now faces is a potentially significant shift of assets from its two flagship funds to other fund managers; some fund managers are already rubbing their hands in glee at the idea of the fresh flows coming their way, but hopefully some will give Barnett the benefit of the doubt. Whatever happens, he is going to find Woodford a very hard act to follow.
Tuesday evening saw the Fundscape team head off to the Aberdeen platform awards dressed up to the nines and with no coats. Geordies we’re not, but at the beginning of the week the evenings still had that balmy summer feeling to them, although just a few days later the chilly nights have started to set in. It was a great evening as usual and it was great to catch up with the platform industry. Two platforms stood out and won the key accolades of the night: Transact for best platform for adviser service and best large platform provider, and Axa Elevate for best smaller platform provider, and the big prize of the night — best platform of the year. Well done!
Are you, like me, wondering where the year has disappeared to? We’re now officially in the fourth quarter, and we’ve just sent our third quarter data requests to platforms. One platform was way ahead of us, sending its data through on 1st October before we’d even asked for it (well done TDDirect)!
This will probably be the last time we collect the data manually as we’ll be migrating data providers onto a database from next quarter. That means that instead of sending us an excel template, platforms will be able to log in to our system and upload the data directly. It will save us a huge amount of time, so naturally we’re really excited.