The platform market is maturing and a natural by-product of this is increasing merger and acquisition speculation. This, along with ever improving due diligence practice, has brought the issue of platform financial strength and performance into sharper focus. Overall, this level of analysis is a good thing because adopting a platform that goes belly up or significantly changes focus could prove to be a rather costly pain in the rear end for an advisory business.

Of course, anyone who spends time buying or selling companies will tell you that straight-up on-paper financial performance is only a crude indicator of long-term financial viability. It matters, but as part of a bigger picture.

That bigger picture is where you live – in the real world, where you have lots of competing requirements. So priority comes heavily into it. Strong profit performance might be the number one concern for Adviser Kate, yet scale of a parent company or AKG rating might matter more for Adviser John.

Financial health is also a messy thing to assess. Independent wraps like Novia, Nucleus and Transact are easier because they all report accounts that clearly apply to the platform. Life companies and some of the former fund supermarkets are a different herd of cats. There’s a host of different business models and in some cases the platform is so heavily embedded into the overall company accounting that it’s impossible to extract properly meaningful data. There’s also the issue of how services are charged between different companies in a group – meaning that the platform can bear the cost of group services and be artificially held back from making a profit, if that suits the accountants.


You do, and here is my proposal for a wee checklist that might help. Add and delete from this as you like, these are just my suggestions. Some of this can be researched (for example via Companies House) but asking the platforms as part of your due diligence process is a good place to start.

Insanity big table x

insanity table 2 vX

If a copy of these tables in word format is any use to you, click here Turnover-is-insanity-profit-is-profanity-tables-only

You can interpret the results in a number of ways. If any measures that you deem to be a 4 in importance rate as a 1, it’s likely to knock that platform off the list. You can also do this in a matrix to produce overall scoring – spitting out a ranking of those that have the best match based on your own criteria.

And just to be really, really clear before anyone gets mardy: BUSINESS PERFOMANCE IS ONLY ONE AREA OF DUE DILIGENCE. I’m not suggesting for a second that people go about picking platforms based purely on it. In reality, assessing this stuff is often more about verifying that selections based on proposition have no business performance issues that will scare you off.

Something that is unsuitable for your clients but financially rock solid is still unsuitable.

5 not out

So a big week for me and for the lang cat, although there’s no time to stop and reflect. Yes, this is one of those self-indulgent milestone blogs. Feel free to stop reading.

It’s five years ago this week that I left corporate life and started out on what would become the lang cat. With no kind of money, an additional lang kitten on the way and literally no clue what was going to happen, it was without doubt the scariest time of my life, except when I went on the waltzers. I hate waltzers.

I was lucky to have some very enlightened and trusting early clients – step forward Paul Goodwin and Anthony Rafferty of Aviva (at the time at least), Neil Lovatt of Scottish Friendly and Dave Ferguson of Nucleus. That gave me a start, and got me out of the spare room and into an office cupboard with no windows which was christened ‘the gimp cave’. Days of thunder, I tell you.

Spool forward 5 years and things couldn’t be more different. There are 10 lang cats with two based in a mythical place called England, we work with clients in Ireland, Australia and the USA, and the business now has two specialisms – the consultancy that I kicked off and a burgeoning strategic comms and PR business. “Look, Mum! What’s that business doing?” “Shhh, Timmy, it’s burgeoning. Don’t disturb it.”

Here’s 5 things I learned so far:

  1. People generally want you to do well. Let them, and take the help when it’s there, whatever form it’s in.
  2. Try not to be a prick. When you fail at that, say ‘I’ve been a bit of a prick’.
  3. Hire smart people and don’t forget the fact they could almost certainly get better jobs elsewhere.
  4. Make it about the work. When people ape your stuff, be flattered not cross.
  5. When you’re tired, and you will be if you do something like this, remember what got you going near the start and do what you need to do to get that feeling back.

I’ve said this before, but the lang cat started out as a howl against all sorts of things. We’ve changed and got bigger, but we’re still howling, and we’re not going to stop.

So a glass is raised to everyone we’ve worked for, everyone who’s bought our stuff, and everyone who’s made the jump and come to work here.

As I wrote at the end of our first year: cheers, skol, merci, takk, asante sana. Alla you.

Here’s to the next five years.



The exciting ever changing world of platforms

The exciting ever changing world of platforms.

The current state of the UK platform market is as exciting as it’s been for a long while, and in our view there are some hugely significant changes taking place. Over recent weeks we have seen a number of platforms being rumoured as being up for sale, and a couple of interesting acquisitions on the asset management side. And just today Money Marketing are reporting that AJ Bell have entered into an exclusivity period with Cofunds. The platform market is a-changin’

But as ever the question advisers need to ask themselves is “so what”? Even if you last reviewed your platform due diligence 12 months ago, and I suspect for a few advisers it will be a lot longer than that, the market is in a very different place. It is also highly likely that whoever your platform of choice is they have changed significantly from the last time you formally reviewed them, but “so what”? Is the current uncertainty for a number of big players a concern to advisers, or if not when does it become so? And if it is a concern, what should you do about it? It’s one thing stopping using a platform for new business, but an entirely different issue if you want to start moving existing clients off a platform. When does a change of ownership and/or direction become a problem? We’d love to hear adviser views on this subject.

As challenging as this might be platform suitability needn’t be rocket science. Client needs beat adviser needs with the needs of the provider coming a distant last. Advisers who select platforms based on client needs, and document how and why this decision was made rarely go wrong. Amidst all the excitement of the current platform changes it’s important that advisers don’t lose sight of this fact, and don’t press the panic button too early, but care is needed.

The FCA factsheet on using fund supermarkets and wraps states “Developments in the market could mean that your chosen platform provider(s) may not remain the most appropriate option for your business or clients. You may need to carry out periodic reviews.” It seems to me that the with the largest platform provider potentially changing ownership, the imminent sunset clause, and all the other changes happening, now is probably time for a “periodic review”.





What should we do about sequence risk?

Sequence risk has been a hot topic lately and with recent market volatility questions of post-retirement portfolio construction are at the forefront of advisers’ minds.

However, new research from CWC Research produced for the FE Investment Summit later this month, finds adviser attitudes towards sequence risk and its management within retirement portfolios vary widely across the industry.

The research, based on detailed interviews with advisers, finds that while many believe sequence risk is an issue for their clients, not all agree. Within the CWC Research sample, one third of advisers hold no cash whatsoever to manage market volatility, while 40% recommend holding two years’ or more.

Within the responses, Clive Waller, Managing Director, CWC Research, found one adviser recommending seven years’ worth of income in cash or near cash for clients with a low attitude to risk, while another argued that holding a cash reserve reduces the return on the portfolio, making it harder to achieve the benchmark and the portfolio asset allocation, dictated by the client’s attitude to risk, is sufficient hedging of sequence risk.

Such diverse views are confusing for would-be clients and do little for confidence in financial advice. Fortunately, advisers will be able to hear further details of the research at the FE Investment Summit on 22 September and debate best practice for post-retirement investment across all market cycles. Speakers include:

Morning Session – Blending asset management, platform & insurance solutions. What do advisers need to consider?

Clive Waller – CWC Research
Thomas McMahon – Financial Express
Martin Lines – Partnership
Nick Dixon – Aegon
Simon Massey – Met Life
John Lawson – Aviva
Gregg McClymont – Aberdeen Asset Management
Carlton Hood – Old Mutual Wealth
Paul Boston – Novia
Richard Romer-Lee – Square Mile

Afternoon session – The challenges for advisers. How to deliver compliant advice in a commercially viable manner.

Mark Polson – the lang cat
Ian Shipway – HC Wealth Management
Anthony Villis – First Wealth
Malcolm Kerr – Ernst & Young
Rory Percival – Financial Conduct Authority


Tickets are free for advisers, and £495+VAT for anyone else

To book your place email

What will September bring?

If there is one thing I’ve learnt during 20 years in financial services, it’s that August is traditionally a quiet month. Everyone goes on holiday and then frantically crams in two months work into September. Already I can feel the September surge coming through, but this time it feels different. Quite a lot did happen in August, and it wasn’t particularly pleasant.

During August the FTSE100 went down by 9.52% , or 637.74 points if you prefer. Anyone who spent August on a beach away from it all would have had a nasty shock when they logged on yesterday. As well as the traditional accumulating investor there is now a new set of investors for whom August’s events could potentially have been very damaging. The pension reforms, and resultant surge in drawdown investors have created huge debate about the risks of “pound cost ravaging”, and August duly served up a live example of just how damaging market falls in drawdown can be. Any investor who went into drawdown in the first few days of pension freedom would have invested with the FTSE above 7000, or 13.64% above where it’s at now. If ever you needed an illustration of the need to take advice at retirement this is it.

Advisers we speak to are generally very confident about their investment propositions, normally with some sort of centralised investment proposition in operation, but are less confident about post retirement propositions. The rules are changing, there are new products coming to market, and whilst the need for advice has never been greater, how can advisers construct a centralised retirement advice proposition (might need a new name for this…) that is compelling, compliant and commercially viable?

Fortunately, there is a conference later on this month that will discuss all of these issues and more. The FE Investment Summit will explore the issues surrounding post retirement financial planning, with experts from asset management, regulation, insurance and advice.

The day will be structured into three distinct cohorts looking at the post retirement world from the point of view of insurers, asset managers and advisers. The insurer cohort features Partnership, Met Life and Aegon, Asset Management is represented by Old Mutual Wealth, Novia and Square Mile, and the adviser cohort will feature HC Wealth Management, First Wealth and Ernst & Young.

Alongside the cohorts we have 4 keynote speakers, Thomas McMahon from FE, John Lawson from Aviva, Gregg McClymont from Aberdeen Asset Management and Rory Percival from the Financial Conduct Authority.

Throughout the day there will be plenty of opportunity for questions, discussion and challenge from floor, with panel sessions hosted by Clive Waller and Mark Polson. The presenters have been told to expect questions! Tickets are still available…


Click here to book your place.

Early bird, prior to 4th Sept

• Adviser individual seats are available at £100 plus VAT.
• Tables (seating 8) are available at £1,950 plus VAT.
• Provider individual seats are available at £395.

From Sept 4th

• Adviser individual seats are available at £125 plus VAT
• Tables (seating 8) are available at £2,495 plus VAT.
• Provider individual seats are available at £495.

• A 10% discount on all adviser rates is available for PFS and IFP members.


Big news today that BlackRock, which looks after more money than you can POSSIBLY IMAGINE, has bought the robo-adviser (and I might be sitting in New York but I’m still going to spell ‘adviser’ correctly) FutureAdvisor for an undisclosed sum which the FT reckons is between $150m and $200m.

OK, so a takeover, no biggie. Robos are big news here and everyone gets it. They’re massive and a world away from what we have in the UK.

Ah, but wait. FutureAdvisor currently has…$235m on its platform. That’s about £150m. And it’s just sold for (if the FT is right) about £125m. £150m AUA, £125m purchase price.

Well now. If we’re now valuing advice businesses at 83p on the pound then I know a lot of advisers who are going to start getting very excited. Stick ‘robo’ on the front of your firm, rename it to something funky with a capital letter halfway through, and boom! Riches result.

Except, of course, that’s not quite what’s going on. For a start, FutureAdvisor has built a bunch of its own technology, so BlackRock is buying intellectual property rather than assets (it has plenty of those already). How do you value (relatively) early-stage businesses in a sector which is as hot as fintech? Generously, it appears.

(Just a point – a number of adviser firms are starting to offer ‘robo’ type propositions in the UK, which are powered by third-party technologies such as Parmenion’s Interact simplified advice system. Just so we’re clear, the big valuations are for those who’ve developed the tech, not for those who’re licensing it and using it. Sorry.)

Second, the story here is that brand matters. We know this from Schwab, who launched its ‘Intelligent Portfolios’ in March, and now has over $3bn AUA. Was some of that rewritten from Schwab’s own book? Sure. But who cares? That’s $3bn since March. March. Even Betterment, the robo AUA leader, only has $2.5bn to show for a good couple of years effort.

Vanguard’s Personal Advisor Services is a hybrid service, and has $21bn on it. In May, according to Ali Malito of Investment News, that stood at $17bn with $7bn of that being new money. Put in GBP, that’s £13.5bn. Vanguard’s been at this for about 5 months officially, and has taken $4bn during that time. In the 2 year pilot preceding that, it took $7bn of new money.

So BlackRock is coming to the party, on the bet that a nice system (and FutureAdvisor does look nice) added to its very powerful brand, will quickly add billions to its AUA. Don’t forget as well that over here there has been no RDR and no PS13/1, so asset managers and platforms have lots and lots of ways to generate margin from what it is that they do.

It’s getting exciting, sports fans. Coming up soon – ‘is the fintech bubble about to burst?’ stories…


As Bill Hicks once said, ‘oops, did I leave a cigarette lit or something?’

As I write…

• Dow down 6.5%, over 1,000 points.
• FTSE 100 down 3.5%
• China down ‘a shitload’
• European indices down over 5%
• Twitter meme incidences of ‘traders with head in hands’ up by 5 million percent.

So the correlation of two lang cats leaving the UK to work on the USA PR and marketing operation for one of our clients and sniff around roboadvice while we’re here to global market meltdown is exactly 100%. Anyone who wants to pay us loads of money to stay put in future should apply at the number below.

Actually, apart from the fact that everyone has a little less money now, and with a decent beer in New York costing $10 that’s an issue, there’s some good news in this.

As you probably know, we do lots of analysis of advisers’ Centralised Investment Propositions, especially in the outsourced market. If you didn’t know, you’re forgiven, but should read up here. Nearly all the risk-banded multi-asset funds or model portfolios offered by DFMs have the same belief at heart – that they can control volatility by using a) good active managers and b) non-correlated asset allocation.

Over on the other side, the passive hounds bark that this is all a load of mince, and that the ability of these propositions to do that is unproven.

When we analyse portfolios, we look for major corrections in the market which provide a very useful reference point. We can run performance before, during and from the point of whatever market event is making everything go shoogly.

Our best model point before today was 2008; a time when relatively few of the propositions advisers use were around. So there’s a huge amount of survivorship bias and general skewing, which is a pain in the Ronson when you’re trying to draw conclusions.

But rejoice! Not only do we get a nice new model point for our analysis, this is a BRILLIANT OPPORTUNITY for all the active managers, multi-asset / multi-manager funds and DFM model portfolios to show how good their vol control is and how they ‘add value’ (bleeuurgh, their words not mine) in a market which isn’t simply rising.

Lads, it’s time to suit up and prove the doubters wrong. Give us a shout and let us know how you get on. We’ll be watching…


It’s all in the game

One of the most iconic scenes in The Wire is the court room scene where Omar, a character who has a penchant for murdering drug dealers, is being cross examined by an especially slimy prosecution lawyer. After a couple of minutes of the lawyer lambasting our hero for living off the drug trade and creating misery Omar, or Mr Little to give him his courtroom name snaps, pointing out that the lawyer is just as guilty as he is. “I’ve got the shotgun, you’ve got the briefcase. We are all in the game.”

Incidentally, if you haven’t watched The Wire, stop what you are doing, go home, buy/download the box set and do try to keep up in future. It’s peerless television. If you ask me nicely I’ll even lend you the DVD.

If you work in financial services in any way then you are part of the financial services game. The general public finds it hard to distinguish between the different parts of the FS industry and sadly certain elements have a reputation similar to that of drug dealers (hello bankers). Whether this is valid or not is irrelevant. Everyone within financial services knows we have an image problem, and also everyone knows the only way we ultimately make money is from the end customer. It’s just a question of how removed from them you are, how transparent you are about it and whether you put the customer’s needs above your own.

Companies exist to make money and ultimately become wealth generators. This is perfectly valid, however financial services should be a special case. One of the most depressing aspects of the poor reputation we all have is that financial services should be the ultimate social industry. What is more important than saving for your future and protecting the ones you love? The answer is nothing, and unfortunately financial services has failed to recognise, and still fails to truly put the customer’s interests first.

The launch today of a consultation on pension transfers and early exit charges is a small opportunity to do something about this image problem, and make improvements that will truly benefit the customer. Make no mistake, this is big. Pension reforms have been front page news on numerous occasions, including today, and the government knows it impacts a key voter demographic. It’s not a story that is going to go away soon. However for some providers this consultation is something akin to turkeys voting for Christmas. They are being asked to help people take their money out faster, to be charged less for it, and to pay to develop seriously old systems for the privilege. With an estimated £26bn of legacy assets at stake it’s a huge issue for the industry, but one that gives us an opportunity to truly put the customer’s needs first. Exit charges are not technically obsolete, but the time is fast approaching where they will become morally so. Providers need to recognise this and go with the flow. If you need legislation before you commit to changes then it’s clear to all the type of game you are playing.

Price: only important in the absence of clear value

Last week the lang cat launched PLATFORM PRICING PROPHECIES: PAST PRESENT AND PHUTURE. If you haven’t downloaded it yet, consider yourself on the naughty step…but don’t worry…you still can and all will be forgiven.

Calling it as we see it is kind of our thing and the paper has elicited (ooh fancy) a fair bit of reaction and comment across both the traditional and social medias. Which is great, because it’s always good to talk.

Perhaps the most contentious issue, which being honest was a bit of a surprise to me (in a good way) is the price versus suitability chestnut. We called out in the paper that analysis of pricing trends was a separate issue to suitability and it wasn’t our intention (honest) to put anyone on the defensive over their level of charging. The study was, however, about market pricing trends and to do that without assessing the highest and lowest points would, we think, have been ducking the issue. Indeed, via our ninja produced #heatmaps (as you read this Steve is on holiday, probably), the lang cat has been documenting pricing competiveness since time began (which, if you’re five, is sort of true).

It’s good that this has come to the fore. The platform sector can seem overly sensitive to price because all you ever heard for about two years solid was that a, b and c was cutting x, y and z charges.

Price is important, but here’s how I see it; only once a suitability match has been made. Whether that’s identifying a single platform that can meet the needs of all clients, or more typically these days, a small panel that’s designed for different client segments. Once a short-list has been identified that’s when cost assessment really starts to matter.

The UK platform sector is pretty diverse and that’s something which should be celebrated. For example, you’ve got James Hay, which can support highly sophisticated SIPP investors, Old Mutual with Wealth Select’s sub-advised portfolios, open architecture platforms like Transact, True Potential offers an end-to-end solution (and is also doing some pretty cool mobile technology stuff) and Aegon has just launched on-platform unit-linked guarantees. That’s just to name a few, there’s a good deal more in between.

It just doesn’t look to me like a market that’s going to consolidate into a much less interesting mass of three vertically integrated behemoths; the AUSTRALIA ARGUMENT has been doing the rounds for years now, it’s just not happening over here and I for one don’t see how it’s going to in the (ph)uture.

I think platforms should focus on what they’re good at and communicate those things clearly. And that includes being honest about what they’re less good at (or at any rate, less suitable for).

And, by the way, the same philosophy applies to D2C platforms that are also gratifyingly diverse. SHAMELESS PLUG ALERT. At the lang cat we try to practice what we preach and our forthcoming Direct Platform Guide (which will have a much cooler name than that) will give you our analysis on the differences between the main players – and believe me there are plenty.

In the meantime, did I mention you can still download the pricing guide?

Better communications: Only smarties have the answer

I was interested to read the FCA’s discussion paper around smarter consumer communications, published yesterday here.

The Regulator has recognised the fact that the way the financial services industry communicates with its customers often leaves a lot to be desired.

Christopher Woolard, director of strategy and competition, said: “information itself does not necessarily empower the consumer… it can overwhelm, confuse, distract or even deter people from making effective choices if presented in a way people struggle to engage with.”

The discussion paper suggests moving away from “a box-ticking approach to communication design, or the perception that communications driven by regulation are the responsibility of compliance and legal staff” and “adopting innovative techniques to improve how key information about products is conveyed and delivered to consumers”, with video being highlighted as one option.

All this is great, but I think the way information is delivered is only half the battle. Yes, I like ‘information snacking’ as much as anyone, with my news delivered in 60 second bites or 140 characters; but I’m also capable of delving deeper and reading material that engages and informs.

And that’s the key with consumer communications. We need to deliver information in a way that engages and informs and that doesn’t make you want to rip your eyes out to make it stop. The problem is that currently, a lot of financial services communications is either really technical or too fluffy. Most of it is very dull and there are a lot of pictures of happy old people on a beach. Or looking into the sunset. Or on a beach looking into the sunset.

I recently opened a regular savings account for my daughter. Despite the fact that both she and I already have accounts with this well-known high street bank, I had to go into the branch for a 30 minute meeting to open the new account. The meeting involved information delivered verbally, on-screen, via a leaflet and through a short video. Having already chosen the account before I started, I’d frankly rather have applied online in three minutes (like Mike Barrett’s credit card experience), but at the very least we could have skipped the video, which really didn’t add anything except more time spent in a stuffy office.

So yes, let’s definitely do smarter consumer communications. Let’s cut through the jargon; make things simple without making them trivial; make things a bit less dull. Then it doesn’t matter if it’s a video, a brochure or a tweet – it’s whatever format is most effective to do the job.