Mark Till, Chief Distribution & Marketing Officer, Aegon


The FCA has set out plans to investigate competition in the platform market. What do you think of the concerns the regulator has raised, particularly around the use of complex charges and whether platforms offer access to value for money products?

The platform market is increasingly the beating heart of retail financial services. Since the first fund supermarket was launched 17 years ago, the concept of aggregating your wealth online has revolutionised the ways that advisers run their businesses and support their clients. But following the regulatory upheavals of RDR and Sunset in the last five years, it’s understandable that the FCA will want to understand whether the transparency that now sits at the core of a platform’s proposition is working as it was intended.

Platforms typically separate charges into various elements so customers understand how much they are paying for what, but this transparency may be considered more complex by some, whereas others may think it appropriate for the value they are getting compared to more traditional ways of managing their portfolios. Similarly, some platforms reduce charges once an investor’s assets exceed certain levels driving better value for money albeit at the expense of simplicity. Value for money is about more than simply lowest cost. It’s about the benefits, communications, engagement tools and services provided compared to the overall charges.

The FCA will also want to explore if platforms and their increasing scale have a positive competitive influence on pricing, and the inter-relationship with other aspects of the price the customer pays (the fund and advice charge). As part of the review, it will therefore be important to be clear on the different roles of platforms, fund managers, product providers and advisers.

Should advisers be worried about the scale of replatforming underway across the market?

There’s currently a lot of activity in this space at the moment, but with different platforms pursuing different approaches it’s best to look at projects on an individual basis.

Embarking on a large scale project of this nature means you need to be extremely clear at the outset what you’re looking to achieve, as well as realistic as to whether it’s manageable. Starting with a blank sheet of paper and a general idea of improvements you’d like to make can get out of control as inevitably you are led into areas you didn’t expect to enter. Platforms rely on the smooth functioning of many, many processes and the interaction of multiple bits of software. If you’re trying to create the foundations of a platform like this from scratch, that’s when things get very scary, very quickly.

For our part what we’re doing is different from a traditional replatforming exercise. Instead we’re carrying out a technology upgrade with an established platform and adding functionality and data to it. We know the systems we’re using inside out and the platform is based on some of the most modern platforms in the market. Our goal is simply to add features which existing Cofunds’ users value to a platform which is already operational to benefit the wider user base. 

Do platforms need to evolve to survive?

Wherever you look across the financial services landscape change is happening at pace and none more so than the platform market. Regulatory and technological drivers are helping to contribute, but the benefits platforms bring to clients and their advisers is the biggest factor fuelling the success of the platform market. This has led to rapid growth with predictions that assets on retail platforms will reach £600bn by next year. However, a hugely important factor in the evolution of the market is scale. In order to remain competitive and viable platforms of the future will need to have more than £60bn. This is because it costs a lot of money to continue to invest in your proposition and user experience and without a significant customer base, it will be hard to keep pace with the competition. This is one of the factors that has prompted Platforum to predict further consolidation and ultimately no more than 5 scale players in the market.

What is platform providers’ role in delivering robo/online advice?

With a recent survey suggesting three quarters of advisers are unsure what constitutes robo-advice and just 24 per cent of consumers saying they’d trust robo financial advice, there’s still a huge question mark over it. Technology has positively disrupted many business models but when it comes to financial services, there are still a number of challenges to overcome. At a high level robo-advice will improve efficiency and has the potential to disrupt the market.

At the end of the day, Aegon wants to provide intermediaries with the best tools and services to enable them to grow their business, what we don’t want to do is compete for distribution by providing an automated advisory service. However we are keen to see advisers use technology to enhance their advisory services and robo-advice sits in this territory.