Advisers, pigs and early birds is the catchy (click-bait) title of our most recent newsletter. For those of you who don’t subscribe, we’ve posted the text below. You can subscribe at the bottom of the homepage.
A lot can happen in a year… As we celebrate our first year at NextWealth, we keep asking: what’s next? We’ll be posing that question at our must-attend conference on 26 March at the Royal Institution in London. In the meantime, we offer our view on what might come to pass this year.
But first, consider the context. In 2017 sales were driven by pension transfers. In 2018 growth slowed and markets softened. We saw three platforms and the parent of a fourth platform list their shares publicly.
As for 2019, it is the year of the pig, a symbol of good fortune, wealth, honesty and prosperity. The pig is the twelfth of all Chinese zodiac animals. According to ancient myth, the Jade Emperor said the order would be decided by the sequence in which the animals arrived to his party. The pig was late because the wolf destroyed his house; he had to rebuild before he could set off.
In a way, can’t we all empathise with the pig? After all, we too need to get our house in order before we party. The retail investing market is shifting—and 2019 is about getting everything ready for future growth.
So what does the industry need to do?
- Platforms and DIMs need to sort out their propositions for retirement income. In our Retirement Advice report in June, we reported that 53% of advised assets are for clients in retirement. Advisers think that will increase to 59% in 3 years. Most platform MPS products are designed for accumulation. Many platforms lack basic functionality to manage income for clients in retirement. One quarter of advisers have a different preferred platform for clients in accumulation and clients in retirement. 2019 is the year to sort it out.
- Get out your chequebooks. M&A of financial adviser firms will continue apace. It picked up in 2018 and the pace will continue or quicken. It’s getting harder to run a small independent advice firm.
- Do right by investors. The most successful vertically integrated models will integrate to deliver value, a simple proposition and positive outcomes for the client and adviser. Vertical integration can and should work to the benefit of the investor. Firms that own the supply chain can control costs across that supply chain. Sadly, when firms get big, the incentives often get out of line. The Royal Commission in Australia and the potential for a read across to the UK is scaring the wits out of some big vertically integrated players. We think the virtues of vertical integration (when done right) will become more apparent in 2019.
- Change your charging structure—or just lower your charges. This is one for financial advisers and asset managers in particular. We hope 2019 will bring a rise in fee-based charging from financial advisers. We also expect to see movement from asset managers on fees. The regulator is certainly pushing for it.
- Register for NextWealth Live! Join us as we explore these issues and more at our conference on 26 March at the Royal Institution in London. Early-bird tickets are £395 +vat and we are offering a generous 25% discount for parties of three or more. Also, we’ve just confirmed that Mark Dampier will join our panel on future flows. Andy Bell and Adrian Grace will discuss future business models with Peter Mann. We’ll cover blockchain, the future of the customer and more. Unlike other conferences – we have no sponsored speaking slots and attendees will be part of the conversation.
Our articles and blog posts
Shape of Flows: Retail Fund Distribution by Channel. UK fund flows are on the verge of a massive shift and our latest report offers our view of these changes and their impact. Flows are concentrating to a shrinking number of funds. Retail assets are being re-broked for lower fees. New money is coming in the form of strategic partnerships, deals that come around infrequently and are typically at a lower margin than retail funds.
- 50% of advisers use a DIM for an average of 14% of client assets.
- Advisers are almost as likely to use DIM off-platform solutions as they are to use on-platform solutions.
Source NextWealth survey October 2018
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