thewealthnet: FCA's 2018 interim report on platforms is an opportunity to increase investors' value for money, says Multrees CEO
20 December 2017
The Financial Conduct Authority's (FCA) platform review is seeking transparency, fairness and value for money for the underlying investor, chief executive of Multrees Chris Fisher told thewealthnet.
Investment platforms are increasingly used by consumers and financial advisers to access retail investment products and to manage investments. The platform market has steadily grown, with assets under administration (AUA) for both adviser and direct platforms increasing from £108 billion in 2008 to £592 billion in 2016, according to data from the FCA.
Mr Fisher stated that the platform market is very diverse with firms such as Multrees at one end, catering for discretionary managers and high net worth individuals, and retail platforms at the other. The two types create different dynamics and according to him, retail platforms focus on scale, process and product, whereas a more open architecture platform such as Multrees has necessarily developed to provide value for money for a more knowledgeable and discerning customer.
"We ran a detailed price analysis of what we [Multrees] charge compared to the retail market and we were amazed at the difference. There's a lot of scope for the retail market to get more efficient and improve value for the customer in our view. It appears that a lot of investment has gone into developing product propositions in the retail platform market, as opposed to creating fully open architecture and efficient investments support engines, which has been the focus at our end of the market.”
For Mr Fisher, the platform review is coming at a timely interval as it will "level the playing field". He considers that the ability for investors to transport themselves from one platform to another in order to get the best deal is crucial and not necessarily the case at the moment.
He added: "We never dictate to clients that their customers have to be on our platform and we have the infrastructure to deal with off platform clients as well. That's the way retail investors are going to go. The customer has to be able to move easily but still have advisers in place."
Increased choice for advisers and their customers is a key element of the platform review, Mr Fisher said, and will lead to platforms being more competitive and more transparent.
It will also have beneficial effects for customers in terms of cost, he noted. According to Mr Fisher, when a platform allows an adviser to consolidate all its clients on a platform and manage them efficiently, this has a positive effect on an adviser’s business model. Despite the adviser firms benefitting from consolidation, it is the client that shoulders all the costs in the retail market.
"The FCA review is good idea, and timely, and certainly makes me look up and think ‘how does our business model fit into the market’. In a lot of respects I think that we are in a good position but there is always room for improvement. Overall, the platform market has a lot to learn, and ultimately consumers will have better access to better platforms as a result," Mr Fisher concluded.
The FCA aims to publish an interim report by summer 2018 which will set out preliminary conclusions and any potential remedies to address concerns