UK advisers are increasingly thinking of switching their key clients from platforms that are due to undergo significant technological upheaval to avoid possible service problems, according to Nucleus chief customer officer Barry Neilson.
Neilson says that advisers are increasingly aware that once there are problems, it is then too late to do anything about it.
Speaking to International Adviser, Neilson said: “If you are an adviser and you have clients that are caught up in the midst of a re-platforming failure, it is very difficult to move the client at that point because you will be waiting to see if the data is accurate, if there is any remediation or additional trading that is needed to correct the position, and you will want to see that through before you move the client.
“What we are seeing is a greater trend towards advisers trying to anticipate problems and we have seen an increase in advisers who are concerned about the Quilter replatforming in particular and are actively considering removing key clients from Quilter in advance of that taking place to make sure they are rid of a potential problem.”
Post-RDR innovation
Neilson says that many advisers will have a concentration of fees to certain clients – perhaps 20 clients who generate say 80% of their revenue – and that “these are the clients you really don’t want to be experiencing servicing problems”.
Neilson says that the platform industry doesn’t really feel settled in terms of technology and part of that is because advisers are innovating in terms of their service proposition.
“Fifteen years ago, most advisers were using platforms the same way to do the same thing, all broadly with the same client proposition. Post RDR advisers are more innovative in terms of servicing their clients using all sorts of combinations of life planning, capital modelling and investment services.
“We have an adviser business that has just launched an accountancy subsidiary to offer accountancy to financial planning clients. The problem for the platforms is that they are now dealing with micro-audiences, so the platform has to be flexible enough and modern enough so that you can make it bespoke.”
Concentration risk
He also suggests that recent platform review may have missed a significant risk in the market.
“It seems quite clear that the platform market study was driven by the competition agenda rather than looking at industry infrastructure. They were interested in driving down costs and things that would create more competition between platforms.
“There was less about concentration risk from the technology providers so, for example, FNZ with their array of clients would be a good example of concentration,” Neilson concludes.
