And that’s why I think the acquisition of Intelliflo by a mahoosive fund management house is particularly interesting. You don’t have to be Nostradamus to see that Invesco may just be interested in what happens if back-office systems do manage to disintermediate platforms.
Invesco’s aims
I don’t think for a second that we’ll suddenly see Invesco funds available for direct purchase via Intelliflo.
For a start, advisers are instinctively wary of tied cottages and vertical integration, and more than a few firms have been in touch with us to express concerns that a fund manager will be able to see what they’re doing with other fund managers – if you reject platforms on the basis of ownership by connected parties, then why not back-office tech?
For what it’s worth, I don’t think that’s a huge issue. Invesco looks after roughly $1trn (£750bn) of assets, and just bought Guggenheim Investments’ $38bn ETF book, so it probably doesn’t care how much of your client’s self-invested personal pension is in Schroders’ funds.
But what might be happening here is that Invesco is looking at how the future of investment buying on behalf of clients might play out. If platforms really just do four things – buying stuff, holding it, telling you about it, and selling it when you’re bored of it – then it follows that each of those disciplines could be replicated somewhere else.
It’s in the nature of technology and market disruption that the most established patterns of usage are the ones that get hit the hardest, and with more than £500bn on UK adviser platforms right now there is plenty to go at.
How far are we away from a CRM/back-office system offering a custody, dealing and administration arrangement that removes the need for a ‘platform’? I’m not saying any of it is easy: I lived through some pretty difficult platform years myself in previous jobs.
But what’s to stop Invesco buying a platform (or the bones of one) and stitching the whole thing together?
We’ve already seen Benchmark Capital (parent of the Best Practice network, the Fusion platform and the Enable back-office system) do just that, and win a big investment from Schroders in the process.
There are regulatory smoke signals here, too. From time to time various talking heads from Canary Wharf have wondered aloud what purpose a platform serves if, for example, your client is just holding a multi-asset fund. Isn’t that 0.35 per cent a bit of a waste? Wouldn’t it be great if you could fire trades from your back-office system straight to a custody arrangement that holds your MyFolio or LifeStrategy fund? For a minimal cost?
