We first started thinking about the opportunity to launch an ‘offshore’ platform along the lines of the platform model that has completely taken over the mainland UK market as far back as 2011.
Back then, there was a strong belief among leading international consultancies that much of Europe was eyeing the introduction of the Retail Distribution Review (RDR) with interest and was mulling over the introduction of something similar in their own jurisdictions.
It is worth saying here that our target markets are the British expat centres. Even back in 2011 it was clear the UK’s Crown dependencies were due to launch their own versions of the RDR one year behind the UK, which is what happened.
Opaque offshore market
At present, the offshore market is still much like the mainland UK market was back in the 1980s and 1990s before the complete and sudden collapse of the life company offering, the then ubiquitous bond product.
That was a market dominated by high initial commissions and charges, all hidden from the customer. It was a very unhealthy state of affairs and there were many disappointed customers when the time came to realise their savings.
The situation globally is even more extreme now than it used to be in mainland UK, with higher charges and commissions. There is, in my view, a place for the bond product in the market but it is massively over-sold at present.
Despite the scepticism about market readiness for an offshore platform, we believed there were enough advisers offshore who could see the writing on the wall for the old way of doing things.
Moreover, many others offshore simply wanted things to change and would likely welcome a clean, transparent offering.
Looking at the offshore market, we could find little evidence of successful market penetration by the few platforms that had launched. I put this lack of success down to two things. Those platforms that had entered the market had not invested in technology to anything like the level needed. Neither had they invested in distribution. They were instead waiting for customers to come to them, which is always fatal.
Novia’s shareholders were sceptical about the readiness of the market for a transparent offering and were further put off by the lack of success to date by those that had entered.
