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FundsNetwork plans multi-million pound platform revamp

Pat Shea, head of Fidelity FundsNetwork, is planning a three-year multimillion pound overhaul of the platform to keep a competitive edge and ensure adviser support

FundsNetwork plans multi-million pound platform revamp

Having guided FundsNetwork through the regulatory minefield of the retail distribution review (RDR) and platform paper, Pat Shea is preparing to splash out millions of pounds revamping the business in an effort to ensure it thrives in an increasingly competitive market.

Shea (pictured), an American who has been with Fidelity since the 1980s, took on the top job at FundsNetwork just over a month before the RDR came into force.

The following three months were consumed with preparing for the platform paper. Although most of the work, such as launching an unbundled charging structure and moving away from a reliance on fund manager rebates, had already been done, there were still some surprises in store for Fidelity, notably the ban on fund groups cross-subsiding their platforms.

Total revamp

Like all of the fund supermarkets, FundsNetwork had work to do to adapt to the direction of travel first set out by the Financial Services Authority in 2010. However, Shea said the work was far from over because he had recently been given the go-ahead to implement a three-year revamp of the platform.

‘We, alongside many other [platforms], have been consumed by the regulatory agenda for the past few years. I was appointed to do an evaluation of FundsNetwork, and my multiyear multimillion investment has been approved,’ he said.

‘It’s safe to say over the next three years we’ll be investing more into FundsNetwork than we ever have in the past. It is three years of major development: in its proposition, service, usability and client experience.’

Pension offering overhaul

Evidence of this investment and Shea’s honest evaluation of FundsNetwork’s failings can be seen in its recently announced plans to overhaul its pension offering.

The platform is working with technology provider GBST on the launch of a new Sipp offering and will review the position of its current Sipp wrapper from Standard Life which has been the sole provider since 2009.

Shea said Fidelity’s pension proposition needed to evolve. ‘We’re moving from just having funds on the platform, but when you look at the market, something like 30% of it is in bonds or pensions. I didn’t feel like Fidelity had a competitive and compelling offer in that space. That’s why we’re introducing the pension next month,’ he said.

‘It’s a critically important part of the market. We had a third-party solution, but it wasn’t competitively priced or integrated.’

Increasing adviser support

Shea said FundsNetwork had recently increased its sales and service staff by 40% to provide more support for advisers and would not rule out looking into offering a support services proposition similar to Standard Life’s IFA support arm, launched in May.

‘It’s not just about selling to advisers, but about helping them with their businesses and finding ways where Fidelity can add value.

‘We listen to what advisers are telling us they need, rather than what is important to us,’ he said. ‘Doing the latter is an arrogant way forward and isn’t going to deliver the type of results we want.’

Platform paper setback

Shea admitted the platform was surprised by the FCA’s proposed ban on fund groups cross-subsidising their platforms in April’s platform paper.

FundsNetwork had only recently launched its Navigator multi-asset fund range in February, but it fell foul of the regulator’s rules because it had previously charged no platform fee when advisers bought the funds via FundsNetwork.

Shea said the platform decided to change the deal to be compliant as soon as possible.

‘The announcement did surprise us a little bit,’ he said. ‘We wanted to quickly react to it and not wait until the rules come into effect next year because it is in everyone’s best interests.

‘We took a decision we didn’t want to increase the end price to the client, so we reduced the annual management charge, but introduced a platform fee to make it cost-neutral.’

However, despite this setback, Shea said FundsNetwork was in a comfortable position in regards to its pricing and it did not need to respond to the downwards pricing pressure felt by some of its competitors.

Over the last year AXA Elevate, Nucleus, Transact and Seven Investment Management have all cut their prices. Shea said FundsNetwork would keep its 25 basis points platform charge for the foreseeable future.

‘We’re not feeling the pressure at the moment, and it’s those who are at the higher end of the range who have been considering how much they’re charging,’ he said.

Despite FundsNetwork being just one part of Fidelity’s UK business, Shea was keen to emphasise its importance.

‘The platform represents a cornerstone of our business model and it is very important to us. We were early movers in the platform space, and still see tremendous opportunity. We believe the platform space is going to continue to grow substantially,’ he said.

Curriculum vitae

2012-present     Fidelity, head of FundsNetwork

2005-2012            Fidelity, head of European customer services

2001-2005            Fidelity, country head of Taiwan

1999-2001            Fidelity, Asia Pacific chief operating officer

1994-1999            Fidelity, country head of Bermuda

1986-1994            Fidelity, various roles in US, including accountant and internal consultant

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