The industry should be focusing on the impact technology has on transparency, says Nucleus chief executive David Ferguson.
Speaking to advisers at Nucleus’ annual conference, ‘Disruption 2018’, Mr Ferguson said: “When we discuss the impact of technology, we talk about mobile, and apps and uber-isation. This misses the point. Technology’s biggest impact has been transparency. It’s now mandatory to tell the truth and over time, that means the greatest value flows to those who add the most. The customer is beginning to be put first.”
Mr Ferguson added that this means financial advisers must get ‘more human’ with their clients and commit to being even more on their side as “no-one can disrupt human connection.” He went on to say that this is where platforms can help advisers, by investing to extend capability, drive digitisation and hold the asset management community to account.
“Strip everything back and all this industry does is connect people to the stockmarket. Platforms sit in the middle and orchestrate the whole thing,” he said. “Everything else, DFMs, asset managers, just produces content. Platform business models are still kind of new but in no industry has a content provider emerged as a winner.
“Content providers’ orientation is always wrong. Desperate to sell more content over better serving the customer. Some platforms are just serving the fund management community, while others are rightly trying to serve advisers and their clients. Platforms exist either to sell funds or to make advisers’ lives easier.”
Mr Ferguson also believes that transparency will become the focus, as he believes that platforms are the only entity that can really tell people who is getting value for money in an investment sense.
“As we continue to develop the Nucleus wrap we, and just like the FCA, need to get more curious on asset management, on value for money.
“MiFID II led to disclosed fees rising 25 percent between 31 December and 3 January. Way more than in other industries, costs in fund management have a direct impact on the utility value of the product. The average active fund now discloses costs of more than 100bp. But yet, overall, fund groups capture only about 30bp in fees. Why are clients paying three or four times that?”
Nucleus is a wrap platform founded in 2006 with assets under administration on the platform of £13 billion as at August 2017.