by Richard Bradley, Head of Data
It’s that time of year when pundits throw their metaphorical darts into their metaphorical dartboards to produce their investment predictions for the coming year. So we thought – ahead of our Online Investing report out next month – we’d look back at some of our predictions from last year’s report.
"The continuing decline in open-architecture and our expectation of more platforms launching their own in-house funds”.
Since our report was published in February we’ve seen a number of new plays in this area: AJ Bell launched a set of passive funds, Chelsea Financial Services launched its Chelsea Managed Funds, Barclays Smart Investor added Ready-made Investments and Charles Stanley Direct added its own multi-asset funds. There are now only a handful of open architecture platforms left that don’t have some form of simplified product range/investor journey.
“Robo advice 2.0, as robos turn their focus from portfolio construction to financial planning”.
Immediately post-RDR, many groups were looking to take guidance as far as they could go without straying into advice territory. This dam has now broken. Over the last year we’ve seen more robo advisers embrace the ‘advice’ part of their epithet and use it as a differentiator. The end of 2017 saw the first major high street bank launch a robo (NatWest Invest) with an explicit £10 charge for a robo-delivered personal recommendation. It remains to be seen how many investors are prepared to stump up the hard cash for a personal recommendation delivered by a computer, given that firms’ personal recommendations must be paid via an explicit adviser charge. This month has also seen Scalable Capital introduce a £200 advice option, though we expect the initial free ‘triage’ session to be enough for many. Hybrid advice looks set to be a catchphrase in 2018!
“Cash remains the enemy!”
We said it last year in relation to long-term savings and we’ll be saying it again this year. Over a third of the population have some form of savings but no investments, and there’s still so much that can be done to make investing simpler. This year’s Online Investing report focuses heavily on investors’ and non-investors’ experiences using platforms. Non-investors we interview typically find our market to be totally overwhelming, and even after an hour poking around platforms, many still don’t even know where or why they would start investing, let alone how they should be doing it. Even when we manage to convince a saver to dip a toe, we still present so many barriers. Processes such as purchasing a fund can be bamboozling to laypeople – many platforms lack any explanation of what’s happening between order and execution, leading to uncertainty about whether they have successfully invested or where their money is.
We’ll be discussing the findings from our research, including our platform testing results, at our Online Investing breakfast briefing on 27th February. The event is currently full but we are happy to share the findings after the launch or arrange a meeting with your team to discuss the research.