Firms have developed the capability to hold protection products on a retail investment platform. How does it work and do you think the market is moving this way?
Holly Mackay, The Platforum
In quarter three of 2013 we asked a sample of 887 advisers what other products and services they would like to see a retail investment platforms add.
A third (31%) said improved access to cash products and fixed term investments, a link to client banking and current accounts (16%) and over one in ten (14%) said annuities.
Finally just under a quarter (23%) said they would not like to see any additional products or services on platform. However, just 12% cited protection as something they would like to see via a platform, while a small 4% said they would like to see mortgage products available.
Supporters of platforms expanding into other areas beyond investments cite a “holistic approach to the client planning process” that is not merely restricted to investments.
Those against this sort of expansion typically mention a “jack of all trades, master of none” argument – that platforms should focus on getting investments right first before they expand into other areas.
It seems reasonable to say that the protection market is broken in the same way which the wealth management market was. Protection is currently transaction-based and inflexible. It is not typically subject to ongoing review and has high commission levels.
Moving forward, why shouldn’t protection work alongside the annual review an adviser will conduct of wealth and investments? Next year we’ll get an early sense of how enthusiastic uptake will be but I think this side of the market needs a shake-up. Super clean critical illness anyone?
Mark Peters, Zurich
The key elements of our new investment linked life cover (on a platform) are its simple, very easy to understand and there’s no underwriting. It protects your investment from market falls in the event of your death. It works alongside a client’s investments. On a platform you have a whole host of different options, such as an investment account, ISA and pension. What life cover does is it protects all of the assets and investment options available on your platform.
Feedback from advisers has been positive. Life cover is something we’ve always offered previously and advisers have been looking to us to offer this kind of benefit. I guess the difference is we’re doing it on a platform now and offering some innovation and differentiation in that respect. Not all advisers will see it as relevant for every client but the beauty is they will be able to pick and choose for the right clients. The feedback is people who want to use it for estate planning will see it as a useful tool.
It’s about putting all your financial needs in one place, mixing your protection and investment needs together. I think others may well follow suit, others may not. We are fortunate in some respects in that we have a protection business outside of the platform business, so it’s an extension of our investment arm that we are bringing it into the protection arena. Others who have a similar arrangement, such as a life insurance arm, could do it as well.
