The conversation on client charges as a whole is currently being discussed in a refreshingly forward thinking way from most sides. Unbundled and transparent fees, flat fees, the changes imposed by MiFID II and the unintended impacts of positive reform have all had their day in the sun recently and will continue to do so over the coming months. It’s easy to forget that we’re only five years removed from RDR. How times change and how much further we’ve come as a client-focused sector.
Inevitably, the conversation on charges has reached platforms. What should we charge? What should we charge for? Who should pay those charges?
In summary: I’m firmly in the ‘change is coming’ camp. Change is often seen as optional. In reality, it is rarely anything but necessary for those who want to survive and thrive.
You don’t have to be the industry’s most insightful observer to take note of all of the above and conclude that the status quo won’t be here for much longer. The shape the change takes, however, for platforms in particular, is worth considering.
The conversation on whether the client or the adviser pays is important, but is also perhaps the wrong starting point. It is far more interesting to consider what exactly should be paid for, before you settle on who foots the bill.
Firstly, platforms which offer superior functionality and ease of use will take over from the larger, more cumbersome platforms, which offer a less friendly window into the soul of client finances. This has been our belief from the start at Hubwise and it’s why we currently have unique options like clients accepting rebalances through our portal and the ability for clients to request ad-hoc documentation or monetary transfers.
As education around what’s available increases, clients (and advisers) will become more and more aware of the increased choice. Why pay more for something that does less? For IFAs, you reduce your charges and strengthen your proposition. Clients get better service and support whilst losing less of their gains on charges.
Secondly, if you only use a portion of a platform’s offering, or only use some of their offering occasionally, then why should you pay full time for it? Why should your client?
We’ve stated several times now that we’re big believers in activity-based pricing. Like flat fee pricing for IFAs or performance-based pricing for managed funds, we see it as the way forward to enable a fair deal for everyone; clients, advisers and platforms.
We’ll have more on ABP and Hubwise to discuss and announce in the near future. Until then, I can assure you that we’re marching eagerly into 2018 and a period of positive change that will see the best survive and some of the ‘old ways’ finally consigned to the dustbin. We hope you’ll join us on the journey.