Platforms are dead! So say recent headlines across the financial services trade press.
To be fair, some platforms are dead (I can think of at least three) and some platforms appear to be lurching that way, but others are thriving.
There’s a way to go until the entire sector can claim to have delivered on every one of its promises, but let’s not forget that many of those promises were made by some of the wackier characters who may already have exited.
Let’s also not also forget that there are third-party dependencies for some of the operational simplicity that the sector (or some of us) seeks to deliver. For as long as pension transfers need to be chased from long-dead life companies, or fund groups misprice funds, or the regulator (or the law) requires certain documentary formalities, we simply will not attain the standards of other consumer platform businesses.
But the barriers are coming down. It won’t be long until everything is truly online and day-to-day mobile instructions (whether by adviser or client) take immediate effect. By then there will also have been a rationalisation of third-party systems or widespread agreement to integrate web services.
The big question is who will hang around to see it through? Clearly the financial performance of many platforms is unacceptable and it was always going to be the case that shareholders would eventually say “enough is enough”.
Aside from boring stuff like making money, the other major differentiator between the dying and the thriving is audience durability and engagement. After all, if a platform’s audience exits the profession or has followed a scattergun approach, it’s going to be really hard for that platform to succeed. The days of providers celebrating inducement-led deals with huge networks are over.
Three years on from RDR and six months ahead of the sunset clause (which was the really destructive catalyst for the fund platforms), we are entering the next phase. Maybe in this phase the winners will become more clear.
My money is on those who have put technology before people, those who can now scale many times over without throwing the whole thing out, and those who are here to provide great infrastructure rather than just flog funds to make good the collapse in margins over the last 20 years.
David Ferguson is chief executive of Nucleus