Well now, it seems like forever since I’ve had my hands dirty with the Update, ably assisted as I am by Rich, Old Tom (as opposed to Young Tom) and diverse others these days. In fact it’s only been three weeks, but as we all know a lot can happen in such a short time these days.
I was looking back the other day at the first Update – where I promised they’d be short and sweet at about 500 words; another promise broken – which was all the way back in January 2019. I remember a certain grim-up-North-type Young Man saying it wouldn’t last six months – and here we are, exactly 200 weeks and over 190 Updates later (we take Christmas off). Did you know the average piece of whimsy at the start of an Update has now been used on average 2.48 times? And contains on average 1.7 untruths?
Makes you think.
As, hopefully, will this. There has been a gathering stooshie, though not necessarily a stramash, building of late about operational cash on platforms. This is understandable given rate rises, and (probably) rising cash balances on platforms as a) folk hold back from investing in wobbly markets and b) folk are getting older and more are holding more cash for drawdown.
It was excellently written about in NMA the other day by Chloé Meley – and much spirited argument was had. You can read all the names and who said what in the piece, but I wonder if we can’t boil this down to one question: is it better for a client to be paid a certain rate on cash on which the platform retains nothing, or a higher rate on which the platform takes a share? In the piece Chloé contrasts P1 (a Seccl tenant) which passes back all interest but pays 0.1%, with Nucleus (disclosure: Nucleus is a lang cat client) which retains some interest but is paying nearly 5 times as much at 0.48%.
There’s also the issue of whether the platform takes a platform charge on cash or not, so the net rate after charges can easily still get into negative territory, though one imagines that will improve as rates rise.
In the example above, what’s more important? Only you get to decide…
Consumer Duty gets mentioned as part of this, especially in the (slightly less wild-eyed and mental than usual) comments below the line. One thing I think everyone can agree on is that transparency is completely crucial: firms should disclose what they do and what the impact is, and both the platforms mentioned above are good about that. Another thing we can agree on is that anyone holding operational cash on platforms as an asset class or as an investment in its own right (as opposed to third-party deposit accounts) needs their bumps felt; it should be the bare minimum for the shortest reasonable time. Beyond that – well, it makes you think.
TALKING OF MAKING YOU THINK…
It’s nice to have time to think about things, but it’s awfy easy not to make that time. So a good way to take care of your time-to-think needs would be to come along to our next #langcatlive London event, which is now open for booking. It’s called Home Truths, and in it we plan to examine one core question:
What if the home truths we hold to be self-evident are wrong?
The world has changed a lot in the last few months alone, never mind the last five years. Most processes, CIP approaches, charging mechanisms, portfolio construction techniques and more of the fundamental building blocks that go into advice businesses were thought up well before that.
In a time where risk grade 3 portfolios are more volatile than risk 7; where dashboards and open finance promise to remove the mystique of consolidation; where Consumer Duty asks a profession built on protecting clients from complexity to ensure deeper consumer understanding and where even how the industry and profession charge is under attack – what happens when we disturb the fundamentals? Can we change, and should we? What would a planning business built for the next 20 years, not the last 20, look like? What are the roles for providers and planners as we look to the future?
Home Truths, then, aims to look at the everyday, 99p truths that the industry takes as read. We don’t want a safe, normal conference; we want to have what Nick Cave calls ‘good faith conversations’ ; to be able to disagree and argue with each other, and then have drinks. If that sounds good to you, then you should book on.
Home Truths is at the beautiful Royal Institute of British Architects on Portland Place in central London, on 9 February 2023. Free to advice professionals, not free to everyone else. We’re still putting the day together, but it’s open for booking now. If you don’t qualify for a free ticket then you can use code EARLYCAT100 to get £100 off. That expires on 2 December and 50 tickets (whichever comes first), so don’t hang around.
It’s also a hybrid event – our third – and we’re starting to work out how to do this properly now. So if you can’t come to That London then you needn’t miss out – just register for a free streaming ticket.
- New paper out from Altus and Parmenion – this time on how Consumer Duty will drive due diligence to New Heights and some impacts on adviser-as-platform. Worth a read I think, and we approve this message on due diligence for entirely self-interested reasons.
- Talking of due dil, firms don’t commonly look behind the platform operator to the underlying software providers, but as Ruby’s piece shows they are also important to bring into the mix.
- Tom’s done a really interesting new podcat with Simon Eagle of Willis Towers Watson on Collective DC for drawdown. A bit techy in parts but if you’re interested in the at-retirement market and its challenges post pensions freedom it’s very worth a listen.
- And your music choice this week is inspired by the delights waiting in tomorrow’s autumn statement. Do please enjoy this spirited live version of Raining Blood by the always dependable Slayer.
See you next week and here’s to another 200 or so Updates.