'I'm allergic to financial advisers': consumers sound off in platform study

The Financial Conduct Authority (FCA) has released an interim report as part of its market study into platforms. It contains some interesting consumer views on the platform market.

Background

This morning the Financial Conduct Authority (FCA) released an interim report on the platform market, as part of its huge platform market study.

As ever, the regulator was pretty determined to publish the views of consumers who took part in the study. This has happened on several occasions now and the most recent paper certainly did not disappoint. 

On this occasion, the FCA's consumer research was conducted between October 2017 and April 2018 by NMG Consulting and boobook. 

The research findings represent the views of over 3,000 customers of UK investment platforms who took part in the research. Both advised and non-advised customers are represented in the research. They were split up according to the following profiles:

Controllers

'Confident investors, want control over their investments and value the range of investments they can acccess via platforms.'

Loyalists

'Confident investors, but stick to their platform and product of choice.'

Hesitants

Out of their comfort zone, lower levels of assets and more concerned about loss.'

Optimisers

'Confident and know what they are doing, but seek advice when they need it.'

Delegators

'Low engagement, decisions are delegated to an adviser. Check (irregularly) on how it's all going.'

Abdictors

'Very low engagement, use an adviser to tell them what to do.'

Click on to see the findings. 

Background

This morning the Financial Conduct Authority (FCA) released an interim report on the platform market, as part of its huge platform market study.

As ever, the regulator was pretty determined to publish the views of consumers who took part in the study. This has happened on several occasions now and the most recent paper certainly did not disappoint. 

On this occasion, the FCA's consumer research was conducted between October 2017 and April 2018 by NMG Consulting and boobook. 

The research findings represent the views of over 3,000 customers of UK investment platforms who took part in the research. Both advised and non-advised customers are represented in the research. They were split up according to the following profiles:

Controllers

'Confident investors, want control over their investments and value the range of investments they can acccess via platforms.'

Loyalists

'Confident investors, but stick to their platform and product of choice.'

Hesitants

Out of their comfort zone, lower levels of assets and more concerned about loss.'

Optimisers

'Confident and know what they are doing, but seek advice when they need it.'

Delegators

'Low engagement, decisions are delegated to an adviser. Check (irregularly) on how it's all going.'

Abdictors

'Very low engagement, use an adviser to tell them what to do.'

Click on to see the findings. 

Darren, 66, previously advised but now unadvised (part one)

Darren, 66, was identified as being an 'optimiser' - he was financially confident and used managed fund platforms for his wife's investments. 

I am allergic to professional financial advisers... my experiece has been, whenever I ask any questions, they always have to consult the technical departments of their suppliers. Why would I pay a middle man to answer the questions for me?

Darren, 66, previously advised but now unadvised (part two)

I didn't really shop around but I was aware of other Sipp providers and the possibility of transferring everything, but I didn't think there was very much to choose between them. We were established customers for more than a decade and I found their services to be OK.

Rob, 62, just retired, advised (part one)

'Rob' was profiled by the consumer study as being a 'delegator':

Most of the work I did with the financial consultant was after I took early retirement with a lump sum to invest. He is a friend of mine and I could have done it myself but I chose to have advice.

 

Rob, 62, just retired, advised (part two)

I think at the time I didn't really understand platforms and why they were there; the focus was on the lump sum and retiring so it was more important to make sure the money was in reasonable places.

Kath, 65, retired, advised (part one) 

'Kath' was identified by the FCA's consumer study as being an 'abdicator', meaning her finances were solely in the hands of someone else and she did not play an active role in her choice of platform.

I place a lot of faith in him, the fees are quite reasonable. Off the top of my head I can't remember what they are but at the time they seemed quite reasonable.

 

Kath, 65, retired, advised (part two) 

It's very clunky. The [previous platform] was good, I really liked that. The new one is really old fashioned but I am not particularly bothered about that, it just took me a long time to get used to it... It also doesn't seem to be live in terms of values.

Anonymous, advised customer

The FCA said in its paper that 'advised respondents can have low engagement with platforms and therefore understanding can be limited. There is often confusion between the products and the platform. Lines easily blur and often respondents default to talking about their products (Sipp, ISA) rather than their platform. This results in the platform's role being subsumed into elements the respondent cares much more about – the performance of their investments and the adviser relationship.'

One advised respondent classified as a 'delegator', who remains anonymous, was quoted as saying:

It is linked to the website of the financial adviser... where I go to look up how my investments are doing. It is x, they are the adviser, I go through that website to check.

 

Anonymous, advised customer, classified as a 'delegator'

Every six months I look at it and think 'that's gone up – great.'

Anonymous, advised customer, classified as 'hesitant'

It seems like a good way to have access to the variety of funds, whereas at one time I used to manage the Sipp myself. Then I was more in touch but now I would rather rely on them to advise me.

Diane, 55, unadvised (part one)

'Diane', a 55-year-old writer with three grown-up children, was identified as being a 'hesitant' investor. 

I chose a portfolio... I am not hugely bothered about going in on a weekly or daily basis seeing what my funds are doing. I put my money in and if it festers away gently I am quite happy. I am not looking for massive returns.

Diane, 55, unadvised (part two)

It's a brand I trust, it's a very simple and straightforward setup and they don't charge a great deal compared with other places.

Brian, 63, retiree, unadvised (part one)

The FCA's consumer report foregrounded the views of 'Brian,' who it identified as a loyal customer to the platforms he was currently using.

I have used them for four years and have never had problems. It is all open and honest and the service is good. They haven't increased the prices in that four years.

Brian, 63, retiree, unadvised (part two)

I have looked at x because they email me from time to time and I look at what they are offering but I don't think it is worth moving; I am quite happy with who I am with and I don't think I will achieve anything by moving.

Anonymous, non-advised customer, classified as 'controller'

The FCA identified that one of the things customers like about using platforms is the opportunity to exercise control with ease.

One anonymous respondent profiled as a 'controller' by the study said:

I feel much more in control because, when it was hundreds of bits of paper across 50 accounts, it was so widely spread it was impossible to bring it all together. Now if I go on there I will see it moving as the market moves; it is phenomenal. I have got rid of reams of paper and it is really easy to trace.

Anonymous, non-advised customer, classified as 'controller'

The FCA also identified that consumers saw platforms as highly convenient. One non-advised customer profiled by the study as being a 'controller', said:

I use my iPhone as the tool to access and monitor various investment types. Whereas before you had to dig deep, phone up and write, and open the paper to see how BT was doing. It is now all so instant, it makes it great fun.

 

Anonymous, non-advised consumer, 'loyalist'

One respondent identified as being a 'loyalist' customer, said speed of trading was hugely important to their use of platforms.

The speed of transactions has some importance because once I have decided to invest in something I don't want to feel  the price will change before it is executed.

Anonymous customer, non-advised, 'optimiser'

According to the FCA, platform users wanted to spread assets across different platforms to avoid risk; either investment risk or the risk of not being able to make changes in the event of technical issues. 

One consumer profiled as an 'optimiser' said:

One of the reasons I split the money is  I am concerned about how secure the money is. If you put all your money in one place, you could lose that money, so spreading it around gives you some guarantee.

 

Anonymous advised customer, 'delegator'

Advised customers contributed their views to the study. One such consumer, profiled as a 'delegator' said:

No, I didn't choose it [the platform]. I don't think I would've known what to go for.

Anonymous advised customer, 'optimiser'

An anonymous advised customer profiled as an 'optimiser' said they were happy provided their platform had the biggest range of funds at the lowest cost:

I didn't have a choice but I was happy with the recommendation. It's an investment platform and, in my opinion, as long as it has access to all the biggest range of funds at the lowest cost I am happy. 

Anonymous advised customer, 'optimiser'

Price and ease of monitoring was clearly a factor in advisers' choice of platforms too, as this anonymous advised customer profiled as an 'optimiser' said:

[My adviser] came back with a couple of options but definitely focusing on x because he said it was easy to monitor. They had a wide variety of investments and you weren't restricted to a small field under that portfolio. They were keen on price.

Anonymous advised customer, 'optimiser'

One anonymous advised customer gave this justification for using a platform via an adviser. They were profiled as an 'optimiser':

I am happy to pay someone brighter than me and who has done much more research. I am happy to take a high risk as I probably won't ever spend this money so they can do it for me as they have access to that data.

 

Anonymous advised customer, 'delegator'

Another anonymous advised customer had this justification for using a platform via an adviser:

I think I took his [financial advice] wisdom at face value and probably without much input from me. Then I would follow how the portfolio would be going and was quite impressed really.

Anonymous non-advised customer, 'controller'

Some respondents expressed concerns about conflicts of interest. In particular, one respondent profiled as a 'controller' said they were sceptical about the relationship between funds and platforms:

Why are they promoting them? I presume there is something in it for them.

Anonymous non-advised customer, 'controller'

Similar concerns were echoed by others profiled as 'controllers' in the study:

I am always sceptical of top 150 or equivalent from other platforms because there is always going to be some bias. I would rather go to someone who is producing independent information.

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