See, I told you there would be lots going on in June. If you want next week’s lottery numbers just let me know. I’m like some kind of druid here. Speaking of which: obviously the TCWU isn’t the right place to discuss Tory politics – we’ve got Tom McPhail for that – but if I did a poll of all the lang cat’s clients and 40% of them said we sucked at our jobs then I venture to suggest I wouldn’t be taking that as an endorsement. If you did one and 40% of your clients said “actually, I’d rather have someone else looking after my money k thx bye” then neither would you.
It’s nice when lots of things happen because this email is much easier to write, and this week is a gift in that regard. We’ve got not one but two new MPS ranges hitting the market, and so that seems as good a theme as any into which to plunge.
I remember touring around with various footpads and vagabonds in 2018 and 2019 – prelapsarian days, siblings – talking about the impact of MiFID II on the administration of adviser-run models and what a basket case it all is. Mike had a funny slide about how much virgin Amazonian timber it took to print the hundreds of pages of total mince required as part of disclosure, and we enjoyed the look of beaten resignation on many faces as firms realised that yet again they were just there to get topped by the regulator, even if a lot of the MiFID II stuff wasn’t aimed at them.
(We may get a bonfire of MiFID II regulations yet, but don’t hold your breath.)
If you’d asked me then, not that you would have because it would have been a staggeringly boring topic of conversation, about what direction things would go, I’d have said that there would be a flight from adviser-run models to multi-asset funds. We’d have got over the single-line-of-stock issue, clients wouldn’t confuse complexity with suitability any more and we’d all get on with our lives.
In a reversal of druidic fortunes I think I’d have been wrong, and instead I think we’re seeing a flight to externally-run model portfolios. 38% of firms we surveyed recently said they were outsourcing in this way. Maybe these are the sweet spot – they do the diversified portfolio job, they aren’t available to D2C clients in the main, and they’re just sophisticated enough to make clients confident that their money is being taken seriously.
(If you want to see some research on all this, we’ve just contributed to a paper with Copia Capital on whether the CIP engine is overheating: free to download here).
Sweet spot or not, we’ve no shortage of models to look at, and to that list of hundreds of ranges we can now add new offerings from Aviva Investors and Vanguard. You couldn’t get two more mainstream names hopping aboard the MPS omnibus: this is not a fad.
A couple of quick observations on both of these. Aviva’s offering is tied into SimplyBiz and is aimed at decumulation. So that’s hitting a range of zeitgeist points right on the button. We don’t have pay-to-play marketing packages any more, but we do have “multi-year managed distribution partnerships”, so there’s that. It’s also only available on the Aviva Platform. So in one fell swoop we’ve got vertical integration, decumulation, MPS and strategic aligned distribution. Somewhere, a Big 4 consultant is getting extremely hot and bothered over a Powerpoint slide.
Vanguard’s LifeStrategy MPS is less zeitgeisty and is available on Transact, Aviva and Abrdn Wrap, but that doesn’t matter because it’s Vanguard and they can do exactly whatever they want. LifeStrategy is obviously a beast, and unless you have a problem with passives, Vanguard itself or the asset allocations then (judging by top sales on most of the platforms) your clients probably have some money in it. There’s just the single-line-of-stock issue, and that’s what this takes care of. It’s Vanguard’s world, kids, we just live in it…
So that’s another fun-filled week in June over. Can there possibly be more juice left in this most juicy of months? You’ll have to come back next week to find out… (or, you know, just read stuff on the internet).
- More McPhail: sorry about this, but the podcat’s most recent episode with pensions punk Henry Tapper is one of the very best so far and really deserves a bit of your time. Go listen here.
- Good piece from yon Jack Gilbert here yesterday on CMCs and phoenixing. A scourge of our times.
- And your music choice this week: well, I did say we couldn’t resist the metal for much longer. And so it is and shall be. I only recently discovered Sweden’s Evergrey, and I’m very glad I did. So do enjoy Blindfolded, and to be honest for the first two minutes 15 seconds of this ‘film’ you may wish that you were indeed blindfolded. The song’s great, but high concept metal videos…truly specialist stuff. Anyway, give it a go.
See you next week