Hello hello, me again after a week’s break from Updating at a keyboard in favour of Updating anyone who cared to drop by at HomeGame 2 last week. Thanks to everyone who came along – just under 170 in the room and nearly 300 online – and I hope you had a nice time. I had a nice time. If you missed it we’ll put videos up on the lang cat’s YouTube channel next week or maybe the week after because I’m on hols next week. No rush.

Someone who didn’t have a nice time was the person who was grumpy about the part entitled ““The Scottish financial services landscape – fintech and all” in which the chief exec of Fintech Scotland and the Scottish Government business minister did keynotes and in which we did a panel called “Fintech in Scotland” because we didn’t flag well enough that it was about Scotland and they aren’t Scottish. It only goes to show, siblings, that as an event organiser you can prepare for just about anything, but you can’t prepare for stupid. I predict a strong future in Liz Truss’s cabinet for this individual.

Anyway, most other folk seemed to like it and if you would like to be first to hear about our next big event which is in London, the capital city of England, on 9 February, then save the date here.

NO ADVISER? NO PROBLEM

Back to more prosaic matters, and perennial pot-stirrer James Fitzgerald of Citywire (based in England) found this interesting wee story at the tail end of last week. For those too busy to read an Update and a story, this is about one major impact of Consumer Duty on platforms.

That impact has to do with what are known as ‘cross-cutting rules’, which are rules that cut across different business lines. They would suggest, for example, that a provider can’t wash its hands of an advised client, just because that client cuts ties with her adviser. The provider still has to ensure a good client outcome and can’t just sit there chanting “we’re rubber, you’re glue, it bounces off us and sticks to you” until the client leaves for a D2C platform somewhere.

The upshot of this, as James explains in his piece, is that platform providers have to be D2C-enabled as well as adviser-focused. So if a newly-non-advised customer (as opposed to a client which is something different, I think) wants to: add money, withdraw money, transfer in, transfer out, switch, rebalance, get a bespoke report, appoint a LPoA, put money into trust, express an opinion on a corporate action or, you know, die, then the platform is going to have to be able to deal with that directly.

And not just in a grumpy sit-in-a-corner way either. It will have to be nice as pie and do all it can to ensure that customers can do what they need to do without an adviser, and of course part of that will be stopping the paying away of adviser charges in a timely fashion.

Some platforms are reasonably well set up for that already, though not really and I’ll explain that in a moment. But lots aren’t; when we had a look at this pre-pandemic in the light of this little ruffling of feathers responses from platforms ranged from “fine, we’ve got you” to “oh OK but it’s an extra 0.5% a year” to “please go away or find another adviser”.  Only the first of those responses will be OK under Consumer Duty.

A few things to consider here, before you say ‘meh’. First up, advisers typically enjoy greater functionality in terms of portfolio management than D2C customers. Quite right too, you might say. So clients who want intelligent portfolio management and who don’t like the innovative-basket-of-ETFs-that-is-different-from-all-the-other-baskets-of-ETFs that characterise the digital investing / robo space, are in effect, forced to use an adviser. These clients, if they spot it and if all this comes to pass, can now unshackle themselves from the radiator, and do it themselves exactly where they are without the watchful gaze of their adviser. This will obviously end well. History teaches us this.

Second, let’s think about vulnerability. It’s one thing to have had some vulnerable customer training (if you want to see which platforms do this then check out Analyser) but quite another to deal with end customers in various states of disrepair – as human beings inevitably are – on a regular basis and without the fall-back of an adviser. Just ask anyone who’s worked the front desk of any provider.

Smaller platforms are going to find this hard. The bigger shops have probably dealt with every conceivable combination anyway, and while they may not be much good at it, at least there are pathways established.

Adviser-as-platform is interesting too. So you’re the platform, and your advised clients go on it. Then your client sacks you as her adviser, and you’re sad about that, but you still have to offer them a bright and bushy-tailed D2C service, without crossing the line of advice any more, and without getting adviser charges any more either. You set up for that?

We’ve spent a thoroughly unreasonable amount of time on what the FCA is now calling The Duty at the lang cat, and identified lots of impacts; some of which are just glancing blows and some of which will leave interesting bruises for quite some time. But I don’t think we’d quite worked out that one impact would be to make it much harder for any provider to concentrate purely on serving one channel: advisers.

CROSS-CUTTING LINKS

• It comes earlier every year – it’s time for our annual omnibus census of the advisory profession – State of the Adviser Nation. We really really need your help on this – it is now, we think, the biggest independent survey of You in the UK (it might not be but we think it is) and to remain such we need to hear from you, whether you’re DA, part of a network, restricted, independent, a paraplanner, an adviser, an owner, a planner or an admin. Independent means no-one sponsors it and no-one pays to have questions inserted in it. This one is just us. You can also win Fabulous Prizes and everyone who takes part gets a special playback of the results. Please take a few minutes here and we will make it worth your while.
• End of an era at Quilter. We had a wonderful if technically challenged HomeGame during the pandemic with Paul Feeney on mental health – you can revisit that here. All the best to him and to Steven for the new gig.
• I didn’t go to Professional Adviser’s PA360 North (haha, Manchester in England) because it was up against the REAL North conference in Scotland but it looks like this was a good session. The panel were against vanilla, and I’ll let you consider what that means while you read Ayesha’s piece.
• And your music choice this week is one I’ve been holding for a few weeks. I recently took down all the gig tickets from cancelled shows over the last few years, from Faith No More to Fish to Karine Polwart to stuff you’ve never heard of to Suede. Gigs are back and I’m loving it, but I was sad to miss Suede and they’ve got a great new record out. So here’s my favourite tune from it and I hope you like it. Enjoy this live version of Personality Disorder.

I’m on hols next week so another cat will Update you then.

Laters

Mark