Due deference to diligence

In heading up Aviva’s platform business I have to think about what advisers are telling us about our existing technology and service today but also think about the future. Developments in the platform world are easier and take less time than they used to – often due to outsourcing – but you can still be looking six or twelve months into the future for big projects.

The revitalised focus on platform due diligence, created in no small part by PS13/1, reminded me of this. It’s clearly an area of keen interest for the FCA and it’s not going away. Now, for a provider to comment on due diligence is always a bit odd, and we can’t help but ‘talk our own book’. It strikes me that there has been too much of platforms trying to tilt the due diligence tables rather than simply providing useful data and information to advisers to help them create comprehensive, compliant files. That’s the road I’ve asked our business to walk. Suitability requirements are so important that a cheap/quick sale based on high pressure just isn’t worth it. We don’t need it and we won’t do it.

When you start looking at usage my mind inevitably goes to what things will be like rather than what they’re like just now. Aviva’s recent Adviser Barometer survey, which asked 1,500 advisers in March/April 2014, both supporters and non-supporters of Aviva, what they thought about a range of issues, had some results which might be relevant here.

Firstly, two thirds of advisers reckoned they were planning to place 61-100% of their available business onto platforms; only a third have done so already. This is interesting to providers, firstly in an obvious new business sense, but also in terms of planning for asset transition and migration capabilities. It’s not just the case that business will be platform to platform; there’s lots of previously-insured and other business to come on. That has impacts across the business for a number of providers including Aviva. Our job is to support advisers in that transition and take a realistic view of parts of our legacy book in light of what advisers are telling us. It strikes us there is still large potential growth in the market, and a rising tide lifts all boats.

Secondly, a vastly reduced number of advisers are thinking of changing platform in the next 12 months – just 14%. In one sense that sounds concerning – fewer of you are presenting opportunities for our sales guys – but on the other hand stability is no bad thing. It’s also worth pointing out that with 56% of investment advisers using over three platforms, there’s plenty for us to do. We started off being principally a ‘complementary’ platform, but as we’ve grown we find more and more advisers are using Aviva as a primary platform. We’re not for everyone or every client but for those looking for a low friction, low cost solution suitable for the majority of mass affluent clients, we think we’re hard to beat.

Finally, for those who are who are thinking about it, functionality, price and service seem to be top of the charts. Linking back to the due diligence point at the start; when you’re looking at the market make sure to start with a strong understanding of your own proposition and your own client bank, and ask platforms, including us, what they will do to fit your clients’ needs; not the other way around. It’s the only way to get results which will last the distance – and with the Barometer encouragingly saying 96% are thinking of staying in the industry in the next 12 months, we’ll all need to be working together for some time to come.

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2 thoughts on “Due deference to diligence

  • Hello Phil
    One of the points I would make is that platform providers are only listening to things they want to hear. Surveys like your Adviser Barometer are a bit like a playlist on Spotify – mostly old favourites, plus a couple of new tunes your mates have recommended. You havent developed a way of asking questions that might give you valuable insights. But you’re on here now, so maybe that will change!
    I like your platform, it appears cheap and competitive.
    However, your platform makes itself expensive.
    Why?
    It doesnt allow us to use paper to apply (i.e. fill in a form and send it to AVIVA for keying). This adds £700 to our costs for each new client, which we would pass on to the client. So, that makes you (and other platforms that dont offer a paper option) more expensive than those that do.
    Of course, paper is old fashioned etc, so if you work in a trendy, forward looking IT type business, you wouldnt dream of suggesting that you could make yourself more competitive by offering paper applications. You wouldnt think it was the sort of question to ask in your Adviser Barometer survey.
    I’ve told our rep from your company, and I do feel a bit sorry for him – he probably has to wait until Cofunds and Transact decide that paper is not for them any more.
    I can explain to you how we get to the £700, if it is of interest.
    I can also confirm that it is part of our due diligence process when we look at platforms.

    Reply
  • Hi Philip. Thanks for you comment. It’s true that the feedback we get via Adviser Barometer is from advisers who have a relationship with us, but it’s a good sample size and the findings here are consistent with independent research we use to supplement it, so I do think it’s credible.
    However good your research, there are always exceptions to trends and norms. Our model of on-line applications works for the growing numbers of advisers that use our platform and the others that do not accept paper applications – but clearly not all, including you. We have chosen to adopt this as it helps us price our platform competitively for the types of clients we develop the platform for, and in doing so we accept that what we offer won’t be right for all. I think this is OK, provided we are clear about who we are right for, and we have been monotonously consistent about this.
    I’m sorry if this means we can’t do platform business with you. I like Spotify, but still have lots of vinyl too. Thanks. Phil

    Reply

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