But, while it is compelling story telling, it is very seldom helpful – just look at the ongoing battle between active and passive investment management. It is a narrative that leaves little space for the co-existence of what are, in actual fact, complementary investment tools.
With this mistrust of the battle metaphor in mind, I have been reading stories about the rise of robo-advice and its potential to Terminate the financial adviser with increasing trepidation.
That is not to say there isn’t a battle coming (I am a journalist after all), nor that there won’t be both winners and losers. Rather, it is a concern that such a reading needlessly narrows our understanding of the seismic shifts ongoing not just within the advisory space, but within the retail financial services world more broadly – especially when it comes to technology.
In many respects these shifts are more akin to a game of monopoly with multiple, co-dependent players, than an antagonistic game of chess.
"These shifts are more akin to a game of monopoly with multiple, co-dependent players, than an antagonistic game of chess."
A good example of this is last Friday’s announcement by Aberdeen that it has acquired Parmenion. As a rationale for the deal, Aberdeen said: “The acquisition is part of Aberdeen’s strategy to capitalise on advancements in financial technology systems and to become a leader in using technology to provide investors with portfolios appropriate to their needs, while also growing its investment solutions business.”
There is no doubt that Parmenion has the goods when it comes to fin tech, its platform is very well regarded, so from that point of view the deal is a good one. But, more importantly from an advisory point of view, the deal is a clear indication of the importance Aberdeen places on intermediated distribution.
Indeed, one could argue, as tied agents have disappeared and with the growth in execution only brokers, model portfolio services and, most recently, robo-advice, much of the power has moved away from the product providers.
And, unless one has a massive wholesale distribution network on which to fall back, it is understandable that Aberdeen would want to keep as many options open as possible when it comes to seeing how things shake out in terms of pension freedoms, regulations and the increasing concentration of buylists.
And, in that case, owning a platform, especially one active in and renowned for technological innovation is a rather attractive prospect as it keeps its tow firmly in the adviser market.
