The chief executive of Praemium would not build and launch a platform in today’s market, as it is too crowded.
Taking part in a panel discussion at International Adviser’s Fund Links Forum on 17 October, Michael Ohanessian said: “I probably wouldn’t.”
He added that platforms started in Australia in the 1990s before coming to the UK 10 years later, so “both countries have about 30 adviser platforms and a lot of experience”.
“Even if you have new tech, there are a lot of start-ups that are very digital out there, which is something that matters. But it is hard.”
Distribution
During the event, panellists were asked what role IFAs play as a distribution channel for platforms and whether they are necessary in today’s advice market.
Sarah Dunnage, chief executive of Ardan International, said: “For us, we are a financial advice-led platform, we need IFAs.
“They are there to give advice to the client. We are mainly self-service.
“We give them [IFAs] the tech to come and work with it. For us, it is extremely important that they are out there and moving to the new world, where they see platforms as the way to go.
“Also, that they give clients opportunity to make some returns. We have lowered cost and therefore work in a lower fee base and the client can gain. It is about a partnership between the two.”
The future of platforms was a big topic during the event and Dunnage expects that “next place that the market will go” will be international D2C platforms.
“There has to be that direct relationship available eventually,” she said. “For digital platforms, to be able to go direct to clients, that must be the next step that we look to take.”
Commission model
The panel also discussed the news that the UAE’s Insurance Authority (IA) has signed the widely-anticipated Circular 12 (now BOD49) into legislation.
John Lester, business development director at Square Mile Research, said: “There are so many salesman out there flogging policies that are not doing any of us any favours.
“The UK advisers took some time to get their head around changes. We lost a lot of advisers because they were not prepared to make that shift.
“The good businesses that embrace that change will drive us forward.”
ESG
Lester was also keen to talk about how Environmental, Social and Governance (ESG) investing is becoming a key area in the retail space.
During IA’s Fund Links Forum, life companies and asset managers were asked about their views on ESG.
The majority (81%) said that it was here to stay, while 13% said it was unlikely to survive a bear market.
Only 6% said it was a passing fad/tick box exercise.
Lester believes that the drive for ESG strategies is being driven from the bottom up.
Around 120 advisers were polled during Square Mile’s recent conference, with 70% stating they had been asked about ESG by a client in the last six months by clients.
But 57% of IFAs believed that you have to give up returns for ESG investing.
“I think there is a big hangover from historical ethical/green funds that might have been launched too soon,” Lester said. “This is not about fad funds, there are some superb fund managers that have identified a niche area.
“We see this more as whole of market. We have done our ESG rating for every single one of our academy of funds because our advisers are telling us that their clients want to know what the responsibility factor of their investments are.
“We think its good standard practice to apply. I think it will be standard and not a fad.
“At the minute, institutional investors will not give any mandates out to fund managers that do not have an ESG strategy. I can see that in retail in the next few years.”
