Hello again, it’s me back from a month away, and I’m disturbed to see that you all kept reading and engaging with the Top Class Wednesday Update at normal levels while I was away. How am I meant to promote deep feelings of inadequacy and worthlessness in my team if you’re all unfaithful like this?
So to punish you there will now follow a scholarly and lengthy exegesis of the FCA’s DB paper along with…only kidding. I suspect many of you are now off on your hols and missing what is a quite full week in terms of Stuff to care about. Just the basics as I gently return my bloodstream to being actual blood as opposed to 75% Floc de Gascogne.
THE PRICE IS SH**E
Everyone’s talking about contingent charging being banned on DB transfers, and that’s a big story to be sure. It’s well explored in this piece by Maria Espedinha.
But if you open your CP19/25 hymnal to the ‘Addressing Ongoing Conflicts’ section (paragraphs 4.1 – 4.12) you’ll see a proposal on requiring firms giving DB transfer advice to consider existing or deferred workplace arrangements.
The way this is framed (see paras 4.1 to 4.4) is all about cost. So yes, you may give the client advice to transfer out, but why would you choose to put that client in your own CIP / under your ongoing advice where the total cost of ownership is frequently 1.5% or more (often quite a lot more) when they could potentially get that money into a DC workplace pot which is capped at 0.75% and is often much less?
If the answer is that you then can’t give ongoing advice because you can’t earn off the workplace pot, then this chapter is for you.
I have a feeling that choking off the attractiveness of taking on large TV pots by restricting the ability of firms to add those assets to their AUA stack might be even more impactful than the contingent charging consultation.
There are reasons not to consider workplace schemes set out in the CP, and also reasons which aren’t good enough to ignore them, which include restricted fund choice. How many suitability letters include ‘you wish to be able to access a very wide range of funds?’ as justification for transfer? I don’t know, but I’ll bet it’s more than a few.
Here’s the other thing – what price contagion from this across to other forms of pension transfer? And what would that do to the way that most adviser firms structure their businesses in terms of ongoing remuneration?
Anyway, it’s still a consultation and you have until 30 October to respond.
I just wanted to touch briefly on the news that FNZ seems set to acquire GBST; news that broke this week. For the unfamiliar, these are two of the big three platform software providers in the UK, and these two together currently look after about 45% of the total platform market. Once Quilter/OMW moves onto FNZ, and assuming the acquisition goes ahead, the combined FNZ/GBST beast will control about 60% of the market. That’s for the advised side – over on the direct and stockbroking side it’s also just scarfed up JHC.
A bit of disclosure – GBST was the very first PR client the lang cat ever signed and we’ve worked together for something like 7 years. So this all feels a bit weird.
How you feel will depend on what you think about things like concentration in the market, and how important you think underlying tech is. As you might expect, I’m a geek and I think it’s really important. But at the same time, I think back to the lifeco days, and wonder what percentage of the industry was based on Unisure, or the other big-box policy admin systems.
It’s unlikely, I think, that we’ll immediately see every GBST tenant replatform onto FNZ. For a start, FNZ has plenty of other stuff on its plate. And GBST has complimentary strengths, which I imagine is why FNZ wants it. So this will play out over time, of course, and we’ll have to wait and see. But if you’re into platforms, this is the biggest news for a very long time.
- SJP results are out – not all nice reading, but if you’re looking after £110bn then you probably don’t care too much.
- While I was out we started selling tickets for our next #langcatlive event – it’s the 6th year of our DeadX Talks, and this year our subject is ‘value’, especially in asset management. It’ll be more fun than it sounds. Thanks to those who’ve bought tickets already. Those of you who haven’t – we’re about 1/3rd sold already so don’t hang around. It’s on 14 November. Buy your tix here.
- And to get me PUMPED and in the mood for work, here’s something perky. For a given value of perky, obviously. Devin Townsend is what we all need right now.
See you next week