Once online, the investing client is generally faced with two options, either the higher cost but reassurance of personal advice, or at the other end of the spectrum, the less pricey, less shielded execution-only route. Either way, they will all use a platform to execute the investment strategy.
An advice option in the background, as a support to tap into as and when it is needed, could prove extremely popular among investors.
From the adviser’s perspective, their long-term future and increased profitability lies in being able to provide services efficiently along the line between full advice and no advice.
If advisers can move between full face-to-face advice to remote advice with on-line interaction, they will be able to service a greater number of clients, with a lower fixed cost.
Their revenues in turn, will be more stable and predictable. This will result in greater business value building up within their firm. The evidence for this in the current market is made clear by considering the profitability of the large execution only providers, who are estimated to be making net profits of 40 basis points per £1 invested, compared to the professional advisers who are failing to reach half this figure.
The platforms of the future are the ones which can support advisers to grow their margins in this way. Platforms, since their inception, have been highly innovative. The flexibility they can offer advisers to service clients in different ways, will be the test of their survival.
Nicola Robinson is manager, corporate department at Parmenion
