Over the last couple of years, more and more advice firms are starting to build and run their own platform.
In 2022, Seccl said that positive attitudes towards providers were on the decline and found 69% of firms are considering parting ways with their platform.
The survey also found 44% of advisers are considering investment platform ownership.
Mark Sanderson, managing director of Morningstar Wealth, told International Adviser that he thinks the number of advisers taken on the platform responsibilities is not as high as many would think.
“I don’t think anyone said they can be platform providers,” he said. “I would say it’s hard enough to be an adviser. Do you really want all the hassle of managing technology and building your own, when you can actually just be exceptional at the thing you do?
“Most of the adviser firms I talk to don’t want to be a platform. They want to be the best adviser they can be.
“I think for those who really want to go the whole hog and be their own platform that is a small cohort, and they should do that because there’s great solutions out there for them.
“But I think for most advisers, that’s not what they want. I think they want their customers to experience their brand, their workflow, advice process and CIP. But you can do that with firms like us without taking all the risk.”
Consumer Duty
Another big issue facing the whole wealth management spectrum is the Financial Conduct Authority’s (FCA) Consumer Duty.
The UK regulator said it will look to fundamentally improve how firms serve consumers. It will set higher and clearer standards of consumer protection across financial services and require firms to put their customers’ needs first.
There are also ‘four outcomes’ which are a suite of rules and guidance setting expectations for conduct in four areas such as:
- the governance of products and services;
- price and value;
- consumer understanding; and
- consumer support.
Sanderson said: “The Consumer Duty codifies what good firms are already doing. It was interesting to hear the regulator say recently that we think people have a kind of superficial view on Consumer Duty.
“Part of the problem for good firms doing the right things is that they are saying ‘we are already good here’, and maybe not diving as deep as they needed to. I think a lot of those firms will be on that and fix that really quickly.
“From our perspective, we were surprised how much work we had to do on the consumer communication part. How do you communicate with someone and really help them understand what you’re saying?
“When you look at your terms and conditions much of that is geared towards protecting the business – but how much of that is geared towards protecting the consumer?
“The Consumer Duty turns that on its head. That’s probably where firms like ours that are doing the right things have the biggest lift. If I was going to give a document to a relative, would they genuinely understand it?
“I think advisers just need a bit of help from providers about transparency, because that’s big for advisers as well. If we go back to the principle of simplify, not complicating, I think it is a really great thing that will lead to great customer outcomes.”
Deadline issues
The FCA is giving firms until 31 July 2023 to implement the new rules for all new and existing products and services that are currently on sale.
But a Copia Capital Management survey in March 2023 found 73% of financial advisers are not ready to implement their Consumer Duty requirements and 65% said they were lagging behind with the regulation.
Some 8% said they hadn’t started working on the Consumer Duty yet.
Sanderson said: “You should have definitely started working on it by now. It depends which tactic the regulator wants to take, and I think the rhetoric from the regulator has been if we can see progress, then it will give people time to maybe organise themselves a bit better.
“I think if the regulator says, you just haven’t tried, then we may see a much firmer hand taken by the regulator.
“I think most firms find themselves in that first camp, which is trying to do the right thing, and maybe firms have started a bit late, or to the regulator’s point, maybe didn’t think it was quite as much work as it was.”
