It is one of the (very) few things Donald Trump and Hillary Clinton agree on: the cost of healthcare in the US must be brought under control. Simon Edelsten, manager of the Artemis Global Select Fund, explains what this means for investors.
Click here to read the full article
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By Steve Webb, director of policy
The British obsession with homeownership can have dangerous consequences. A recent survey by Barings¹ found that up to three million people of working age were planning to rely wholly on the value of their home to fund their retirement.
We are not talking about people investing in buy-to-let or planning a bit of equity release post-retirement. We are talking about three million people who are putting all their eggs in their home as a means of funding their retirement. They could be heading for a shock.
Our latest policy paper, 'The Downsizing Delusion', analysed the effect of this strategy for someone downsizing at retirement, from an average detached house to an average semi-detached house, then using the equity released to buy an annuity.
The report shows that, looking across the UK as a whole, the average person downsizing from an average detached house (worth £310,000) to an average semi-detached house (worth £197,000) and using the proceeds to buy an annuity would secure an annual income (from annuity plus state pension) of £13,700.
But the typical UK full-time worker has an annual wage of £27,400. This means their income would slump by half on retirement. In many parts of the country where house prices are relatively low, the income slump would be even greater.
The report also explored several other barriers to this 'downsizing' strategy.
The first is that downsizing at retirement may be difficult if the 'spare bedroom' is not actually spare. Growing numbers of young adults are living at home for longer because of difficulties in affording their own home or having moved back in after a job loss or relationship breakdown.
The assumption of a mortgage-free property at retirement is also becoming increasingly questionable, with one in three mortgages lasting to 65 or beyond. As a result, some of the equity released by downsizing may be needed to pay off this mortgage debt rather than funding retirement.
The changing dynamics of the property market also play their part. Despite the widespread perception that housing prices are only ever set to go one way, housing markets experience the same peaks and troughs as other investments. This means that potential retirees may have problems if the timing of their planned retirement coincides with a lull in the market and a lower valuation of their home than expected. Furthermore, a lack of suitable housing stock, particularly in rural areas, may mean that there is nowhere to downsize to unless they want to move away from family and friends.
Although the strategy of relying exclusively on downsizing to fund retirement remains a minority preference, it would still appear that millions of people are pinning their hopes on this approach. This report highlights just how much of a gamble this group is taking.
1 Source: Barings retirement survey, published January 2016 based on a summer 2015 ICM survey of approx. 1,500 non-retired GB adults.
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In the world of financial planning, taxation implications for clients are almost always to the fore. It's reassuring therefore that there's a soothing rhythm to the tax cycle.
Occasionally this pattern is disturbed, the most recent example being the post-election Summer Budget of 2015.
What then are the implications of Brexit?
George Osborne, in his statement following the outcome of the EU referendum, made it clear he had no intention of rushing into an 'emergency' budget, saying: “…it is sensible that decisions on what that action should consist of should wait for the OBR to assess the economy in the autumn, and for the new prime minister to be in place”.
What will be announced in this post-Brexit Autumn Statement/Budget? We can only speculate on the impact on government spending and taxes, but of course that's always the case with a Budget or Autumn Statement. Does financial planning grind to a halt in advance of these events? Certainly not, and to a large extent the opposite is the case. Prior to any Budget, clients might advance rather than delay contributing to a pension, planning to reduce a potential IHT liability or investing into an Isa.
The Brexit decision should not fundamentally change this mindset. Some clients will be more optimistic, some less, but regardless of personal views it should be remembered that the UK has always retained primary control over direct taxation. Remember that direct taxes are those affecting bread-and-butter planning for clients – capital gains tax, income tax, IHT and National Insurance contributions. Those taxes may well be varied in the post-Brexit Autumn Statement/Budget and some may rise and others may fall, but that's life and business as usual.
The impact of Brexit on taxation may be felt in the world of indirect taxes, such as VAT. Perhaps we'll witness a new approach freed from the restrictions imposed by the EU. In any event, that will be a side issue for most clients.
The final word on this subject is best left with the UK's tax, payments and customs authority – HMRC. If you called its helpline (0300 200 3310) just after the referendum, the following message was delivered: “There are no changes in any taxes, tax credits, child benefits or other HMRC services as a result of the vote on the EU referendum. Everything is continuing as normal. No laws have changed. There is no need to contact HMRC as a result of the EU referendum.”
The more things change, the more they stay the same.
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By Ross Jackson, senior marketing manager
There are many different protection online services available in the market and no doubt you'll have used a few when submitting protection business. But why should you have to put up with slow, unresponsive sites for your business when you're used to dealing with slick, modern user experiences in your personal life? After all, your time is precious.
Developing an intuitive online experience
When we were designing our new online service, our first priority was to make the process of applying for protection quicker and simpler to save you time and money. We spoke to a number of advisers and based our development around what advisers told us they actually wanted.
So we developed our online service from the ground up focusing on the following areas:
Now we're not claiming to be perfect and there are many more improvements we want to make to our online service to make your experience even better. In fact, we've a dedicated team that reviews and refreshes the underwriting rules that sit within the system and looks at ways of improving the underwriting journey.
But do other protection online services offer these benefits or similar?
Don't take our word for it
We are delighted to have been awarded five stars for protection in the 2016 FTAdviser Online and Innovation Service Awards. These awards are voted for by advisers and demonstrate we're doing the right things. They reward providers that deliver great service and are developing technologies to help advisers do business more effectively. We were also highly commended for the 5* Innovation award in 2016 for online service which was given to providers that advisers feel are headlining the industry through innovation and technology.
Over 1,100 advisers voted for these awards, and providers were rated on a number of areas including:
If you were one of the advisers that voted for us then thank you! It means a lot. But if you've not yet experienced our new online service, you can find out more and try it for yourself here.
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In the FCA's Business Plan and risk outlook for 2016/17, there is a small paragraph – somewhat lost among the information and proposals on pensions and the Financial Advice Market Review – about “sustainable regulation”.
In it, the FCA commits to reviewing whether any of its rules are outdated and, if so, to removing or redrafting them. This is in the context of the Enterprise Bill, currently going through Parliament, which may mean the FCA has to have the costs of any changes to its regulation verified by the independent Regulatory Policy Committee.
We are aware of the significant levels of adviser frustration with the complexity of regulation. Of course, regulation is necessary to ensure consumers are protected and weed out those giving poor or misleading advice. That said, there are some rules that provide little additional consumer protection but place a disproportionate burden on advisers. And they keep coming. To name just a few new ones:
We have already submitted these examples to the FCA and hope they will be looked at as part of its commitment to reviewing regulation.
Meanwhile, we are just about to release our third annual costs of regulation survey. Every year we ask advisers to tot up the amount they pay for regulation. This includes both direct costs, such as fees for the Financial Ombudsman Service, the Financial Services Compensation Scheme and the Money Advice Service, as well as indirect costs in terms of management time spent on keeping up with regulation, internal and external compliance costs. Last year, we found the average advice firm spends 12 per cent of its revenue on the cost of regulation alone.
I have spoken to some advisers who hope Brexit will lead to a regulatory bonfire. It is certainly the case that when certain issues have been brought up with the FCA it has said its hands are tied by EU directives or similar. Depending on government policy, the FCA may have greater flexibility in the rules it decides to set. However, it is unclear whether it would use this. If the UK financial services sector wants access to the single market, the trade-off is likely going to be accepting market harmonisation rules.
In the meantime, once Article 50 is triggered – and all the prime ministerial candidates have said it will not be done so before the end of the year – the UK has two years to negotiate a deal with the EU. Until then, the EU framework will continue to apply and the obligation to implement new rules deriving from directives such as the IDD, MiFID II and Priips will remain.
There is a great deal of uncertainty in the sector as advisers and their clients try to figure out, and deal with, the fallout post-Brexit. While we will continue to seek further clarification from the FCA, we know nothing quite beats the opportunity to raise the issues you are concerned about directly.
With this in mind, we will be holding two half-day conferences in the autumn as part of our Financial Services Forum series. Speakers will include regulators, policymakers, industry experts and leading adviser figures, and there will be plenty of time for networking and sharing stories with peers. Now is the time for the advice community to shout loudly about the regulations that are not working for them.
Caroline Escott is senior policy adviser at Apfa
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The Financial Ombudsman has dismissed the claims of an advice firm that a client understood the risks of an equity-heavy investment of around £500,000.
Jones Financial disagreed with an earlier adjudicator's ruling that said Miss G should not have been recommended any investment at all.
The advice firm said the adjudicator has been persuaded by the complainant “pulling at her heartstrings” and that it was untrue Miss G did not have any knowledge of investments.
But the Ombudsman backed the adjudicator and ordered Jones Financial to pay £100 and make up any difference between Miss G's investment and what it would have been if invested at base rate plus 1 per cent, with an additional simple 8 per cent interest rate on any loss.
Ombudsman Roger Yeomans says: “How did it come about that a person nearing 70 years of age with a substantial pension income, who'd never held any investments and who was suffering from a life-threatening illness, placed around half a million pounds (nearly all of her assets) in one open-ended investment company which exposed around 50 per cent of that money to the vicissitudes of the world's stock markets?”
He adds: “I don't see why Miss G, with so much money and no dependents, and with a life-threatening illness, would wish to subject herself to the as yet untried, the unfamiliar and potentially nerve-racking experience of watching her fund value – which comprised nearly all of her assets in one place – rise and fall in line with the world's stock market.
“And indeed when Miss G found herself subjected to that experience, it was too much for her.”
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The Pension Protection Fund has a surplus of £4.1bn, a funding ratio of 116.3 per cent, its annual report shows.
The defined benefit lifeboat fund, which is funded by a levy on schemes, had to take on the pension assets and liabilities of failed retailer BHS, which collapsed in the spring.
BHS as the largest of the 47 schemes – and 10,000 members – to enter the PPF over the last year.
£616m was paid out in 2015/16. The PPF has paid out £2.4bn since it was founded in 2005 and has £23.4bn in assets.
Chief financial officer Andy McKinnon says: “We had a successful year despite the challenging economic backdrop. Our robust strategy has put us in a strong position to manage the uncertainties ahead and our long-term risk model predicts that we will achieve financial self-sufficiency by 2030 in 93 per cent of scenarios.
“Members of defined benefit pension schemes in the UK can be reassured that we will protect their financial future should their employer fail.”
AJ Bell senior analyst Tom Selby says: “While the PPF's finances are clearly robust at the moment, significant challenges may lie ahead. Its funding position could come under severe strain if, as many predict, the Brexit vote sends the economy into a tailspin and pushes more sponsoring employers into insolvency.
“The PPF, like DB schemes, is also a hostage to shifts in life expectancy. If people continue to live longer that will put extra pressure on its ability to pay pensions to members of failed schemes in the future.”
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FCA chief executive Andrew Bailey has told MPs he does not know if the Financial Advice Market Review proposals will close the advice gap – one of the key objectives of the report.
Appearing in front of the Treasury Select Committee committee today, Bailey was asked by Labour MP John Mann if consumers can expect to see firms “hung out to dry” by the FCA, citing the Retail Distribution Review and RBS's treatment of some customers.
Bailey said: “The issue with the RDR was that it tackled two things. It tackled opaque commission and it tackled the general question of qualifications and training for the adviser population.”
He added: “But it contributed – it wasn't the only thing that contributed – to the advice gap so that if you are a less well-off member of the public or you don't want lifetime advice it has left a gap.
“The so-called FAMR proposals have got to fill that gap. We have got to be very clear in implementing them, keep asking ourselves the question will they do it or not.”
The final report as part of the FAMR, published in March, set out 28 policy recommendations to boost access and affordability to advice, as well as addressing issues related to the liability of giving advice.
Bailey was pressed by the committee about whether the FAMR proposals would fill the advice gap.
He says: “They have the potential to do it but I don't think we can sign that one off with conviction.”
Bailey explains the success of FAMR depends on whether useful technology emerges in the market but that the “jury is out”.
He adds: “Not because fintech is bad but can it do the iterative advice process you need in that world.”
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TSB Bank is moving its former Northern Rock portfolio to a new brand called Whistletree.
Whistletree has been set up to give the former Northern Rock customers a distinct home within TSB.
TSB bought a portfolio of mortgages and other loans from Cerberus Capital Management in November 2015.
But before Whistletree, UK Asset Resolution handled these customers.
TSB customer service operations director Padraig Carton says: “We are delighted to welcome these customers to Whistletree from today.
“Whistletree will provide a secure, long-term home for these mortgages and loans based in the UK.”
TSB is writing to its customers this week about the change.
The move to Whistletree will not affect current loan agreements.
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There is no denying there are disrupters in town in the form of new financial technology firms and innovative service providers trying to reshape our traditional model. And it is not hard to see why. The financial crisis highlighted the deep levels of mistrust that had developed between bankers and the public, and the subsequent increase in regulatory scrutiny has seen costs for all financial services business rise.
The FCA has said it will support new entrants to the “fintech” market and is pro-innovation and competition in the interests of consumers. However, that does not mean the new landscape will be spared regulatory scrutiny.
The FCA's Project Innovate is well underway, encompassing the use of a regulatory sandbox to provide an area for firms to road test new products and services. There is also the formation of the Advice Unit. The Advice Unit is the regulatory driving force behind the development of robo-advice – or “automated advice”, as the FCA likes to call it – to support lower cost models and consistent customer outcomes with a technology overlay.
The technological developments in financial services are not confined solely to business operations. Regulation is also developing, with “regtech” aiming to improve such areas as the way firms can better manage their data. Compliance officers and compliance teams need to look at how their areas of responsibility can keep pace with these developments, as well as the associated behavioural expectations.
But some things do not change. As FCA director of strategy and competition Christopher Woollard pointed out in a recent speech: “To be clear, automated advice models must meet the same standards as face-to-face advice, and the responsibility for ensuring their model meets the regulatory requirements rests with each firm's senior management.”
The arrival of the Senior Managers and Certification Regime in March this year for banks, building societies and insurers is already focusing the mind and will no doubt be a topic of debate as the regime comes into force at all other firms over the coming 20 months or so.
Meanwhile, the FCA is currently part way through yet another suitability thematic review, with feedback expected later in the year. While these reviews develop, one of the challenges firms face is dealing with new products, which can sometimes be more esoteric or complex.
Advisers will no doubt be aware that firms currently holding the permission for “advising on investments” automatically had it varied to add the new regulated activity of advising on peer-to-peer agreements from 6 April 2016. This enables advice on the new Innovative Finance Isa.
The FCA stated “firms must, among other things, take reasonable steps to ensure that personal recommendations are suitable for their client”. Of course, firms can relinquish the permission if they do not wish to advise on P2P or crowdfunding. Those that are going to advise in this new area, however, will probably need to enhance their levels of competency in order to supervise the activity.
Future developments in financial services from a technology, product or service point of view is likely to be significant given the current encouragement from regulators.
But no matter how exciting these developments are, COBS 9 and Principle 9 are the critical standards firms must continue to meet where advice is provided. Being able to demonstrate suitability remains vital for all involved.
Simon Collins is managing director, regulatory, at Eversheds Consulting
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The FCA has released guidance for fund managers on how to deal with “higher than normal” redemption requests on their property portfolios.
The guidance follows this week's rash of suspensions on nine property funds, worth around £14bn, following the EU referendum.
The FCA says it expects fund managers to fully understand their responsibilities and the tools they have in relation to the fund they manage and to have “a clear understanding” on how to use such tools.
It says: “It is the duty of the fund manager to ensure that assets are valued fairly and accurately and to ensure that any subscriptions or redemptions of units take place at a fair price. Failure to do so may lead to some investors gaining at the expense of other investors in the same fund.”
When a fund has to dispose of underlying assets to meet “an unusually high volume of redemption requests”, the manager must ensure disposals are carried out in a way that does not disadvantage investors who remain in the fund or for new investors.
Fund managers should also consider whether “in exceptional circumstances” suspending trading in the fund is in the best interest of investors and should contact the regulator before deciding on any suspension.
In case of temporary suspension, fund managers holding a large amount of illiquid assets may need to reconsider the move and allow redemptions at a revised valuation of the units in the fund.
The guidance says: “This redemption price might reflect the price at which illiquid assets can be realised in a shorter than usual timeframe.”
Fund managers should communicate to investors the revised redemption price and the opportunity to cancel the request either before or during the fund's suspension.
Investors should also be guided on how to cancel redemption requests or what other options they have including having a sufficient time to seek appropriate advice.
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John Lamb managing partner Paula Steele on building professional connections
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Columbia Threadneedle Investments has temporarily suspended trading in its UK property fund amid client redemptions. The move means more than half the property fund sector is now suspended.
The asset manager suspended dealing on the £1.4bn Threadneedle UK Property Authorised Investment Fund and its feeder fund from today.
Columbia Threadneedle says it has “not been immune” to the retail outflows in the sector, with it meeting requests for redemptions from its cash balance.
A statement says: “However, it is expected that these requests to sell will continue for the time being due to uncertainty in the market following the UK Referendum result, therefore the temporary suspension of dealings allows sufficient time for the orderly sale of assets, and protects the interests of all investors.”
The asset manager adds that property should be “part of a balanced portfolio for a long-term investor”.
The firm adds that it went into the EU referendum with a “high level of liquidity” in the funds.
The company states: “We have an obligation to keep liquidity in our daily priced funds and wanted to keep it open to allow investors to buy and sell their shares. However, we have now reached a point where we need to take action to protect the investors remaining in the funds.”
It takes the total assets in suspended property funds to £14.3bn, following the closure of funds at Standard Life Investments, M&G, Aviva Investors and Henderson. This marks more than half the £25bn IA property sector.
M&G Investments temporarily suspended trading in the £4.4bn M&G Property Portfolio and its feeder fund, while SLI stopped trading on its £2.7bn UK Real Estate fund in response to redemption requests, and Aviva Investors suspending trading on its £1.9bn Property Trust. Most recently Henderson suspended dealing on the £3.9bn UK Property PAIF and the feeder fund.
Laith Khalaf, senior analyst at Hargreaves Lansdown, says: “These funds are therefore likely to be closed for weeks and months rather than simply a matter of days. Clearly there has been a knee-jerk reaction to Brexit in the commercial property sector, which may moderate over time.
“Investors in commercial property funds should not make decisions in a panic. Granted the Brexit vote may have the potential to negatively affect the commercial property market in the short run, but long-term investors should be willing to ride out periods of weakness, particularly when there has been such a sharp decline in fund prices without much evidence of a slowdown in the underlying property market.”
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Written by Mike Riddell
29 June 2016
Headlines over the past few days have screamed about record falls in sterling, record low bond yields and massive falls in equity prices.
However, if you take a slightly longer view of markets rather than simply the one- or two-day reaction, I think it's amazing how little markets have reacted to the Brexit vote.
Take sterling. Yes, the moves on Friday and to a lesser extent again on Monday were clearly large. Deutsche Bank's Jim Reid pointed out that Friday's 7.6 per cent drop versus the US dollar was the 9th biggest since 1862 – not actually the biggest ever, but still huge.
Let's put this sterling 'slump' in context. The chart below demonstrates the moves in currencies since 14 June up to 7pm yesterday. 14 June was the low point in GBP/USD in the weeks leading up to the referendum (but still only the lowest since April), and was around the time when the bookmakers briefly increased the odds of a Brexit vote to as high as 40%. If you had told people on 14 June that Brexit would actually happen, I doubt anybody would have expected that sterling would only fall by 5.6 per cent versus the US dollar from that point to two weeks later, or by just over 4 per cent versus the euro. The UK's real effective exchange rate, which is its trade-weighted exchange rate adjusted for inflation, is now only back to where it was exactly three years ago.
Source: Bloomberg as at 28/06/2016. Please note, past performance is not a reliable indicator of future results.
Yes, we know that government bond yields tumbled to a record low post-Brexit, and 10-year gilt yields hit 0.93 per cent at the end of Monday, the lowest ever. The 29 basis point drop in 10-year gilt yields on Friday was the second biggest daily drop of the last 20 years. But 10-year gilt yields at 0.96 per cent as at yesterday's close are only 18 basis points below 14 June – admittedly a notable move in a normal market environment, although less than the 23 basis point rally we had already seen in the first two weeks of June. The drop in gilt yields from 14 June to yesterday doesn't even rank in the top 600 of the biggest (rolling) two-week falls in 10-year gilt yields in the past 30 years (13th percentile overall).
If on 14 June you had been told the UK would vote Leave, and were asked to guess the best-performing developed country 10-year government bonds, you wouldn't have guessed Spain (-25 basis points). And you probably wouldn't have guessed that Brazilian and Colombian US dollar debt would do even better. You'd likely be shocked that the FTSE 100 would be 3.7 per cent higher! (OK, the FTSE Mid 250 was down 4.5 per cent, but still…). You'd probably be less surprised that Eurozone bank equity prices fell 9.2 per cent (Euro Stoxx Banks Index), although this is less than a third of the move that had already happened in the year up to 14 June. That said, UK bank equities only fell 3.8 per cent in the 10 days from 14 June (FTSE 350 banks).
It seems that either:
The answer probably varies by asset class, and even by instrument. The biggest risk premium that had been built in ahead of the vote was clearly sterling, where markets were essentially pricing in Armageddon, as shown by one-month option implied volatility between sterling and the US dollar as high on 14 June as at the worst of the financial crisis in October 2008, a time when the UK banking system was on the brink of collapse.
It's likely that government bonds were already pricing in a reasonable chance of Brexit, given that the sharp rally that began globally but particularly in gilts at the beginning of June seemed to broadly coincide with the bounce in Brexit in the polls, and the odds of a leave vote with the bookmakers. The government bond sell-off from 14 June to 23 June coincided with a swing back to Remain.
Corporate bonds and peripheral government bonds didn't seem to be pricing much risk in before the vote, and the periphery in particular doesn't now appear to be pricing in much risk of things going wrong after the vote, so spread products seem to be waiting for more monetary loosening (loosening that is already technically happening, with 1ECB's 2TLTRO2 kicking in on 24 June).
The toughest question to answer is whether Brexit actually matters for markets or the economy, because nobody knows, and we won't get much of an indication for the UK economy until PMIs for July are released in early August. In the meantime, there are many market indicators of contagion spreading around the world, but European bank equity is probably the one I'd watch most closely.
¹ECB: European Central Bank. ²TLTRO: targeted longer-term refinancing operations. This is not a recommendation or solicitation to buy or sell any particular security. Source: Alllianz Global Investors, 29/06/2016
Investing involves risk. The value of an investment and the income from it may fall as well as rise, and investors might not get back the full amount invested.
Past performance is not a reliable indicator of future results. If the currency in which the past performance is displayed differs from the currency of the country in which the investor resides, then the investor should be aware that due to the exchange rate fluctuations the performance shown may be higher or lower if converted into the investor's local currency. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer companies at the time of publication. The data used is derived from various sources, and assumed to be correct and reliable, but it has not been independently verified; its accuracy or completeness is not guaranteed and no liability is assumed for any direct or consequential losses arising from its use, unless caused by gross negligence or wilful misconduct. The conditions of any underlying offer or contract that may have been, or will be, made or concluded, shall prevail.
This is a marketing communication issued by Allianz Global Investors GmbH, www.allianzgi.com, an investment company with limited liability, incorporated in Germany, with its registered office at Bockenheimer Landstrasse 42-44, 60323 Frankfurt/M, registered with the local court Frankfurt/M under HRB 9340, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht (www.bafin.de). The information contained herein is confidential. The duplication, publication, or transmission of the contents, irrespective of the form, is not permitted.
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This week we are changing tack slightly to look under the bonnet at the technology providers that power the major adviser platforms, starting with Bravura.
While many adviser platforms are opting to move from proprietary to outsourced technology, we are agnostic on whether they should keep technology in-house or outsource. While this series will see us talk to the technology service providers, we will also profile Transact, a platform well-known for its commitment to proprietary technology. We believe technology upgrades of whatever flavour are critical to providing the service and functionality a modern advice firm expects.
There has been a recent flurry of activity as adviser platforms upgrade their “backbone” technology to improve functionality and the range of assets and investments they hold. We use the term “backbone” technology as it provides the infrastructure that underpins platforms.
Technology upgrades are not taken lightly and are a significant investment. As Bravura group chief executive Tony Klim puts it, these are “once-or-twice-in-a-generation” moves.
Bravura powers the Nucleus platform and is currently running re-platforming projects with Ascentric and Fidelity FundsNetwork. Its flagship technology is Sonata and it has invested over Aus$90m in its development. Bravura has users across nine countries, with ambitions to become the leading global provider of underlying platform infrastructure.
However, its business interests and expertise go wider than pure platforms. It also offers fund administration services and technology, powering the systems of some big global players, including BNY Mellon, Citi, L&G and Schroders. Bravura does not provide administration itself, instead preferring to work with partners that use its technology, like Genpact Openwealth, which provides administration for Nucleus on Sonata. It tells us these partners are an important route to market.
Bravura sees itself as an enabler. It can facilitate all sorts of functionality, from fractional trading to pre-funding, if the platform provider wants to turn it on. This is because Sonata technology is “configurable”, meaning if a platform provider wants to launch a new product on its platform it does not have to go back to Bravura to change its code; it can do it independently. Bravura wants its clients to feel self-sufficient at launch. Its workflow system, which is integrated into the platform, means it is also possible to change processes and rules fairly easy. We think it looks intuitive and easy to navigate.
Bravura Sonata is also written on one global code line, so Sonata clients in Australia and New Zealand use the same underlying code as Nucleus. Bravura likens this approach to the iPhone. As its EMEA business development lead Kirsty Worgan puts it, every iPhone uses one operating system but we all customise our own by adding the apps we most want to make our experiences different from one another.
As a result, Bravura can move quickly to roll out new functionality across all its customers. If users want to turn it on they can. It also means platforms using Bravura's technology could easily integrate with one another should they want to.
Bravura's culture and philosophy is interesting for a technology firm with large institutional clients. It is firmly customer-centric and by this it really does mean the end-customer. The appointment of Peter Mann as non-executive director is another indication it does not just pay lip service to customer-centricity. Mann famously insisted on keeping one empty seat at Skandia board meetings to represent the end-consumer.
We see a link with this customer-centric approach and Bravura's enthusiasm for horizontal integration, where workplace, direct-to-consumer and adviser platforms integrate to offer a single view for the end investor. Klim is a staunch proponent. He believes customers want to see direct investments and insurance products, advised assets and workplace pension contributions all in one place. For him, the future is one where Bravura helps support its partners in giving customers access to information, services and products across multiple channels.
Miranda Seath is senior researcher at Platforum
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