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Intermediary Platforms 2008 and The Provision of Advice

CWC Research in association with BNP Paribas Securities Services have published 2008’s most comprehensive reports on intermediary platforms and the provision investment advice.

Providers selling their platforms on yesterday’s criteria may find they are talking the wrong language to advisers. Not only is the platform market becoming more diverse and complex, the adviser landscape is changing equally fast.

Whereas, two years ago, there were those who had their doubts about the relevance of platforms, this is no longer the case. Moreover, the vast majority of advisers are or will be changing their business models. Even the most reluctant are having to reconsider in view of the RDR.

Now that advisers have become familiar with platforms, they are able to make informed decisions in terms of how they will support their business. They are now looking at platforms and investment advice together.

As a result, major adviser firms are not all opting for big brand provider platforms with huge scope and functionality, some are looking at investment management solutions and the right platform to support that solution whereas other see a genuinely white labelled product as a must have.

We have seen big IFA firms select Cofunds or Fundsnetwork but also Transact, 7IM and Nucleus; we have seen others opt for BNP Paribas or Pershing. All trends indicate that the diversity of platforms will increase rather than decrease as potential providers see the potential in a market where legacy assets are estimated to be in excess of £1.2 trillion in life funds alone. Advisers have traditionally been weak on information technology. Now a significant minority appreciate that the retailer can take over much of the role of the provider if they employ the right technology.

At the same time, there is a diversity of investment management solutions, with IFA firms selecting the traditional firm with an old stockbroking pedigree such as Quilters to the twenty first century cru IM.

This market has a long way to go before it reaches maturity. For more information click here.

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A study - 'SIPPs and Platforms' from CWC Research in association with Mastek

The new magic roundabout? 

75% of new SIPP investment is from transfers – largely personal pensions; 85% is pre-retirement business. It does not take an Einstein to calculate that two-thirds of new SIPP investments are from pension plans that have not matured.
 
Figures published in trade and national newspapers suggest that more than 90% of SIPPs sold by insurance companies are simply invested in the insurers’ own core funds. In some cases, commissions for selling SIPPs are twice those for selling basic stakeholder pensions.
 
Are insurers paying out more in distribution costs and commissions to fight for a share of surrenders of policies that have not yet repaid set up costs, to see the funds invested in new plans with smaller margins?

Are advisers recycling old pensions investments into new pensions investments after taking a second cut of commission?

If so, is this the new magic roundabout or are the lunatics truly running the asylum? 

If so, are the advisers justified in making these recommendations?

They certainly are not if they are taking over 8% initial commission. 

However, we know this is not true of most IFAs, who appear to be justified in moving clients to SIPP.

Whether this is good for insurers must be questionable – there will certainly be losers.

This report looks at all key issues around the SIPP phenomena:

Will advisers use the same platform for all investments, all pace SIPP business with a different provider? What asset classes are employed? Insurer versus fund manager; How do they prefer to be paid? What providers do they prefer and what are the selection criteria?
And much more.

For further information, click here.

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