I’m writing this as we enter the festive period and 2020 draws to a close.
Those who know me, know I tend to look forwards, not backwards. But, this year has been tough for many of us and unprecedented in history, with the political climate, the pandemic and the world facing into an environmental challenge that I believe we must address. I therefore think it warrants a little time to pause and reflect.
I’m new to Ascentric – joining as Interim CEO back in November – but I’ve been around this industry (and platforms) for a long time. In the last 20 years I’ve had the pleasure of doing many interesting things in platforms with Old Mutual, Novia and Aegon, so I’ve experienced my fair share of ups and downs along the way!
As businesses – whether we’re financial planners, advisers, investment managers or platforms – we’ve shared the common challenges and opportunities that the market (and now a pandemic) have thrown at us. They’ve been significant and complex and the impact on our economy – and therefore customers – will continue to be profound for many.
Business models are changing fast. We’re seeing more consolidation of advice businesses and platforms. Margin pressure and operating costs drive much of this in the platform space and this will continue. When I started at my first platform our average charge was 1.5% per annum. I don’t want to open up negotiations as a result of this note, but now I routinely see platforms quoting 20-30bps for essentially the same services.
For advice businesses, the cost and risks of compliance in respect of full service DB pensions and running advisory models are just two examples of the significant challenges you face. And of course many firms are responding by redesigning their CIPs and CRPs.
But, there’s also the client driver. We may be consolidating but clients aren’t homogenous. Clients – like the rest of us – expect more flexibility, choice and personalisation. This is where digital technology needs to step in big-time.
This leads me to the global pandemic. We can’t ignore the impact of COVID. I saw some research recently that surveyed over 2500 enterprise decision makers within businesses globally. It found that COVID had accelerated their digital strategy by six years. I’m sure you can relate to that! Like you, we’ve had to respond quickly and our move to taking all documents electronically has been a huge step forwards. But, we’ve got much more to do and I’ll talk about what’s coming next in a moment.
As I reflect, I do wonder what the long-term impact of COVID will be on the workplace, for example, and whether people will work from home or some kind of hybrid arrangement. It does feel as though having fewer people travelling to and from work is one solution to an ESG challenge.
And, if we think about product choice specifically, I think we’ll see a sharp rise in demand from clients for investment solutions that allow them to do something positive with their money. Investing sustainably in its broadest sense is a strategic route out of the global pandemic – and the climate crisis.