The most significant change has been the pension freedoms. RDR, PS13/1 (payments to platform service providers and cash rebates from providers to consumers) and Mifid II were of course important milestones, but the pension freedoms have proved transformational for investment platforms and advice firms.
Compelled by the government and enacted at pace by the Financial Conduct Authority, control of retirement finances was passed to the end customer, opening up the vista of multiple-choice financial instruments and tax wrappers for the purpose of securing an income in later life.
Annuities receded into the distance, in parallel with years of low interest rates. Only now are they reappearing as a rational option with the increases in base rates.
The net result was that advisers and platforms needed to become more consumer-centric than the brokers and wealth managers of yesteryear.
This was not optional, as in tandem with pension freedoms was the repetitive demand from the regulator that providers of investments must focus on good outcomes for investors.
As I write, the latest call from the FCA – consumer duty – is in its implementation stage and intended to make everyone involved in producing or supplying investments to consumers take responsibility for ensuring those consumers’ best interests come first.
In particular, the concept of ‘avoiding foreseeable harm’ to consumers is exercising minds across the sector. As this decade progresses we may start to see the impact of the ‘foreseeable’ element of this hypothesis if and when investors complain of detriment.
Regulation has in part been about reinforcing trust among consumers; let us remember that an individual entrusting their future financial prospects to those with the expertise to advise and deliver their plan is a privilege we as individuals and an industry must be careful not to lose sight of.
Technology developments power consumer demands
By around the middle of the 2010s, mobile devices had become commonplace, translating into retail investors increasingly requiring access to readily available information.
E-commerce was becoming normal and familiar, with the more tech savvy businesses and individuals depending more and more on tech interfaces to get things done.
At this time, data quality and automation started becoming a driver of quality and scale, impelling cost and time efficiencies.
Growing user engagement and communication on a regular basis provided positive reinforcement. Investors getting easy online access, personalised communications, up-to-date valuations and scalable reporting were now much more informed and connected than customers of just a few years back.
As for advisers, they saw the need for scalable processes where back office and data integration helped them generate quality advice, efficiently and effectively supporting their clients. Meanwhile, increased transparency allowed Mifid II to be enacted properly.
