Episode 28: Heather Hopkins
Heather Hopkins
Founder & Managing Director of NextWealth
You can also listen to the episode on Apple Podcasts & Spotify.
In this episode:
Abraham has a lively discussion with Heather, one of the ‘big brains’ of the industry, on:
How she joined the industry…TWICE
Her entrepreneurial itch and what lead to the creation of NextWealth
Should a platform be aimed at the provider or the financial adviser
How to drive change in the adviser market
Heather’s report on MPS - how she sized up the market accurately, where the MPS market is going and other key takeaways
Heather’s approach to retirement
Guest profile
In a career spanning Toronto, Boston, Tokyo and London, Heather Hopkins is a data and research expert specialising in the UK financial adviser and retail wealth management markets. Heather is the Managing Director and Founder of NextWealth. She is also on the board of the Mercantile Investment Trust and Orbis Investments UK.
Previously, Heather was head of Platforum, a market-research firm servicing the UK platform market, where she worked from 2013 to 2017. Prior to that she was the head of research for Hitwise, an internet data analytics company, working from London and Tokyo. Earlier, she was an executive at Dalbar, an international financial-services data company, based in Toronto and Boston.
Heather helps organise the award-winning Women in Platforms meet-ups, supporting female leaders in the investment industry. She was named “Team Leader of the Year” by Investment Week in 2017. Outside of work, she spends time with her family and tries not to dunk into the river Thames as she learns to scull.
Where to find Heather:
LinkedIn - Heather Hopkins
Twitter - @heatherahopkins
Transcript
Featuring Abraham Okusanya (Host) and Heather Hopkins (Guest).
Abraham:
Welcome to Retirementals, I'm Abraham Okusanya. And it's my pleasure on the podcast today to welcome a guest. One of the ‘big brains’ of the industry in terms of consultancy and digging into data of what's going on. I'm talking about none other than Heather Hopkins the Managing Director of NextWealth - welcome to Retirementals!
Heather:
Thank you. Thank you. To be called one of the big brains by you Abraham is a huge compliment. Thank you.
Abraham:
Oh, absolutely. Look, we're going to dove into a lot of the work that you've been doing,
you know, in the industry but before we do that, do you want to give us a sort of a quick run through how you got into financial services and indeed, you know, the U.K. I know you're originally Canadian, so tell us a little bit about the journey.
Heather:
Yeah, sure. And so I should probably tell you how, I came into financial services twice because I left and I came back.
Abraham:
All right. Who does that?
Heather:
So, so I got into financial services. I think like everybody else, I just sort of fell into it by accident. And I was working for a political party in Canada, running the youth campaign for a national election. And and I got really, really interested in polling because I got to travel around the country with the leader of the party who was doing, you know, leader debates on such stuff. And I'd sit in these rooms with the pollsters, and there would be actual voters turning dials to say how they felt about the leader and what they were saying And then reading all the polling data and splicing that by different demographic groups, I got completely hooked on research and market research. And, you know, as as was the way things were done at a certain time, I found a job in the classifieds section of a newspaper and applied and I got it for a market research firm called Dell Barr It's a U.S. company. But I was in their Canadian office and I started doing mystery shopping. So setting up fund accounts with banks and so on. And doing mystery shopping. And then you worked with them for seven years in Toronto and Boston. And then when I moved to the U.K., I didn't have any contacts on anybody except for my husband. Now, then boyfriend and I found a job in an Internet startup. And so I left financial services, essentially, and I came back when I took over platforum. And it's a story I didn't really broadcast at the time because it wouldn't have been helpful to my position then. I didn't know what an investment platform was, and I was running a business called Platforum completely bonkers. Right. And I thought a platform was a marketplace with network effects. And it's completely opposite in our industry, right. Like, it's completely different. So I came from a sort of Internet startup back into financial services. But the reason I came back was because I was reminded when I was talking to clients at Platforum how there's meaning in this industry. And I think we sometimes lose sight of that. But when I was working for the Internet startups, essentially what we were doing was helping people flog more stuff to consumers. And they really are consumers. It's how do you get what are they searching for in the Internet and how do we sell more? How do we optimize our digital marketing and, in financial services? There certainly is an aspect of that. I mean, you try and get people to invest more but the purpose of trying to get people to engage and to invest is to give them a secure retirement and take away some of the stress that's caused from financial, a sense of financial insecurity.
And I was reminded how expert technically so many people are in this industry and how much they care about what they're actually doing. So I was I was lured back. Can I tell you one more thing about that journey? Not only did I not know what a platform was, I was essentially a stay at home mum. I was working two days a week for a firm, and then I took over as head of Platforum. And it was such a break for me. I mean, I think they got lucky, too. I will say that. But but there's a lot of people who think that you can't take a career break. I took seven years off, worked part time, and then went from basically a stay at home mom working, writing a couple of research reports for this firm called Econsultancy to running Platforum, new industry completely a new role? It was crazy and I loved it. It was great.
Abraham:
Yeah. I mean, it's it's incredible, you did and still do a brilliant, brilliant job at Platforum. What I found is, you know, when people come into the industry, you know, new people have come into the industry with fresh pairs of eyes. We've seen these with the work we do a Timeline and Betafolio when, you know, we bring in a product manager who doesn't understand what a fund is or a platform is. He asked questions that many of us would think, you know, as stupid. But actually when you pause and you think, wow, why do we do it that way? Right. So you did a brilliant job at Platforum. And then, of course, you had the entrepreneurial itch and you decided to scratch it with NextWealth. Tell us a little bit about that.
Heather:
So yeah, NextWealth's a great business, still is. But I didn't, I didn't really fit in that big company. I'd never worked in a big company. And I always had wanted to start my own business. I started a business, was in university briefly organizing children's parties. I don't think I have the energy to do that any more. So there was a combined wanted to do it with a perspective. So my view was that looking at the industry, the retail wealth management industry from the perspective of platforms was the wrong perspective. I wanted to look at the industry from the perspective of the financial advisors rather than the sort of the custody platform on which assets are held. And I think there's a there's just not enough information and insight about what's happening in the financial advisor market in terms of, you know, the tech that they're using, how they're running and structuring your businesses. And the thing that makes it fun as a market researcher is because there's not really great data on how many firms I mean, nobody really even knows how many firms there are, right? We know how many directly authorized firms are, but. Right. You know, we try and guess we do we do a lot of work trying to estimate that. But there's just not much data. So it makes it fun as a market researcher because we can try and pull together different sources to draw a picture of what's happening in tech and investment propositions and in advisor businesses.
Abraham:
Yes. And you know, you've done a lot of work on that around understanding, advisor tech, you've done a lot of work on model portfolios, you know, custom advice. So, so kudos to you. And you have my immense respect for that. As you know, I have been critical of consultancy generally, you know, and I think that you, you are on the good side of that. Right. Which is why we're having this conversation, which is, you know, you mentioned about looking at things from the advisor point of view. The problem, of course, is that a lot of what you see with your previous employers and others is that they're looking at things from the provider point of view. And you have these convolutions sometimes where, you know, they're writing reports paid for by providers. And I'm thinking, sitting there thinking who really, Is the is the client? To me, the advisor are the product? The client is the is the provider where, you know, they're marketing for the providers, essentially. How do you deal with that sort of thing? We know the challenge with, you know, doing research from the advisor point of view is that advisors don't want to pay for these stuff. They're small firms. They don't have the revenue to, you know, maybe to to pay for these sort of things. How do you deal with that potential conflict?
Heather:
So I, I don't know. We're better at it than our competitors. I think they're really good, actually. And I have a huge amount of respect for what they do. And, and everybody has conflicts and it's just how you manage them in terms of what we do. So we do a maximum number of five sponsored reports a year. We don't write about the sponsors business. We write about issues that are related that we think are of use to financial advisors. So we do a piece of work on retirement advice for Aegon. It's not talking about Aegon products, but it's a comprehensive survey of what's happening, you know, in, in terms of retirement advice and how firms are approaching that. We've had some fantastic data in that to show the rise and use of modelling tools such as Timeline, which is fantastic to see over the course of that study. And then but we try to do most of our work on as market reports so that we publish, report multiple people can buy it and then we give free copies to advisors, which is crazy, right? We had a consultant to work for us earlier last year and she said, you've got to stop selling to providers, sell to advisors. And I was like, Well, it doesn't really work sadly. And the firms that would pay the advice firms that are usually owned by providers anyway, so. Right. So, so we do market reports where we do it won't sell it to multiple people. And then if we send a summary to people who are on our research panel, shameless plug, if you want to be part of our research panel, just Google NextWealth panel, you'll find the link and and you know, we'll give a free summary to advisers if they ask for the full copy, then we send it to them and that's how we try to manage our conflicts. The other thing that we do is we do reports that aren't paid for. So we did a report in I think it was May 2020 on digital signatures. And so we got data from 23 platforms across 85 processes for each of those platforms to look at how are those platforms treating document submission? Do they need a paper form, scanned copy, you know, digital signature or just straight through process? Because as you remember when you suddenly couldn't go and meet with clients and you need a signature on form, you were a bit stuck. So we wanted to expose what was happening. And the problem I think that the financial advisor market faces is that these lone voices calling for change are just that. They're lone voices and it's how do you aggregate those views? And that's what we see our role as is trying to aggregate the views of this disparate, fragmented market to try and push for change that matters rather than then change that. Sometimes providers, you know, they do it for the right reason. I think it's the thing that needs to be done, but it's not necessarily what advisors really need so try to aggregate those views, if that makes sense. So anyway, long answer to say everybody has conflicts, we try our best to manage it. I think we've got it right most of the time. We say no to clients who want us to come out with a particular view and we do get those and we just say no. We have refused to renew people for market reports who put too much pressure on us. They think we're too critical of them. We want to take the business. Not great from a business perspective, but I can sleep at night.
Abraham:
I mean, don't get me wrong, I'm not asking anyone to work for free right, you know? I'm just, I like I think that the consultancy model has, you know, as a challenge that advisors had pre RDR, you know, to try and figure out a commercial model that works that sustainable, that's scalable I think it's a little bit of a challenge. But anyway, that's not to say that good work isn't been done. Indeed, you've done a great piece of work that I want us to, you know, to dive into. So congrats on your reports on model portfolio service, especially particularly in sizing up the market. Right. I did a tweet, you know, a while ago when I looked at three consultancy, yours excluded and I looked at how much they said the model portfolio market was one said it was, you know, 40 to 60 million the other said it was I think that was one that said he was the 150 million, you know, you could drive a truck through that gap. And we'd done some work internally, you know, just thinking about these. And so when I saw your report, maybe it's just a validation of my own biasedness you know, where you actually sized of the market, you know, properly you know, covering a wide range of, of, of providers and you put the size of the market around, you know, a 100 million. So, so big kudos to you on that report. And I should say this is not because you also identified Betafolio as the fastest growing, you know, discretionary MPS proposition in the land. And by the way, we didn't pay you for it. So this is the thing for me is like when somebody does independent one that anyone can buy, I can trust the work, well I tend to trust the work more anyway. So congrats on the report. Tell us a little bit about the, you know, the key takeaways findings.
Heather:
Yeah, sure. And can I just I'm going to be like the guest on the Sunday morning show. It's like I just come back to something you said before, just about free reports. So I agree. Nobody should give away free reports, but sometimes there's a topic that needs to be looked at by a research firm or by a consultancy independently that you just don't have the time to get funded or you don't have the obvious sponsors and so I think it's really important actually that financial advisors push consultancies to do some of that stuff because, because it's it's really important for the overall good of the industry not to just do things that can be funded. So, so that that's the only thing i'll say on that. In terms of the MPS report. Thank you. So credit to Alex Johnson our quant analyst. Hannah Wemyss, our client delivery manager who worked really hard on this. I mean, for a few years this is the third year we've been doing this report we only set up four years ago. So we're not going to have much more time to do anything. We've gone out to the market to try and get an estimate from the platforms on assets in discretionary model portfolios, and it varies hugely. So sometimes, if you take, if you ask just one platform, the share of flows going into discretionary MPS they'll say 80%, but another one to be 20%. And as everybody knows, different platform support these things really differently. So getting to that number is really difficult. But we we looked at asset growth. So there's some of the smaller, lower priced providers are growing the fastest. You'd expect as a proportion of assets. The smaller providers have a better opportunity to grow faster because it's from a smaller base. But even when we look up the ranks, those larger providers who are lower priced are growing really rapidly. The other profile of firm growing rapidly is, of course, ones that have their own quote unquote distribution. So part of vertically integrated models in terms of outlook for growth, we think it's going to continue. It's really interesting because we've just done a piece that retirement advice research I mentioned for Aegon. So one thing we consistently hear is half of the advisers say that they would never use a discretionary portfolio manager or discretionary fund manager for model portfolios or bespoke for clients retirement. And so we just asked a few more questions about it and the report will be out in a few weeks. But essentially it's advisors who don't use MPS or discretionary fund managers anywhere in the business. There's not part of the model. It's not a particularly retirement issue. It is in some cases, but not not particularly. But we think there's about half advisors saying they're not using discretionary fund managers. There's a lot of opportunity for growth and there's also a lot of discretionary bespoke that we think will continue to move over to models that are much more appropriate in terms of cost and outcomes for customers and for people with up to a million pound in assets whereas a few years ago the view would have been, you know, it's good for people up to 250,000, but that's, that's really, really climbed. And there's some really interesting things on pricing. So we have clustering of pricing on the discretionary fee and the model portfolio fee. But when we look at OCF it varies a lot more. Advisors really need to be looking at cost and the OCF, not just the MPS fee.
Abraham:
Now a word from our sponsor, Nicki Hinton-Jones. is the managing director and chief investment officer at Betafolio. The high tech, low cost discretionary model portfolio manager. Typical model portfolio service costs about That's in addition to the funds, the platform, you know, they advise fees. Tell us a bit about Betafolio view and approach on fees.
Nicki:
Well, I don't think anyone that knows they're already Abraham would be surprised to hear me say that. In a nutshell, MPS fees are too high. And if you include the fund charges and the platform fee that you already talked about, we get close to 1%, I think on average for a lot of retail clients, and that's before they start paying for the financial plan, which is the part of the service that will ultimately have the most value for them in their advisor relationship. and experience. So, I mean, my view on fees and Betafolio's view on fees is that they have a real impact on client outcomes that needs attention. And that's why we're building a scalable solution with technology that would allow us to keep costs low. And I think we also should consider the impacts of these fees on advisor businesses too, advisors need to to make a profit from from their work, they need to have a viable business and their cost have been rising because of regulation and the more costs they have to pass through to their clients. The overcomplicated services in turn, puts pressure on the advisor's own fees and and ultimately makes it not possible or them to, to run a good business so. Fees are really crucial, and I'm really happy that we're in a position to be having a positive influence on the trends in the market.
Abraham:
I agree with your point earlier about well, if you look at the percentage growth, you look at percentage growth because the upstarts, like us are coming starting out with, you know, smaller assets. It makes sense that, you know, just in percentage terms, the growth has a much bigger impact. But even if you look at these in terms of amounts, you know, so last year, Betafolio went from a 100 million at the start of the year to 750. Right. So that's like pulling you know, even if you exclude market growth that's like putting 600 million. 600 million of asset just, just in a year. Now if you compare that with say Tatton for instance Tatton would have pulled just over a billion in the year. I cannot think of any other MPS provider that's pulled out that size of money. So you are right that there's gravitation towards the lower cost upstarts and you know we know that cost is driving this and technology the question in my mind.
Heather:
I was just going to say, I mean the growth rate of Betafolio is 703% year on year is phenomenal. And if you compare that to the next fastest growing Saracen with 199% growth, it's incredible and Tatton's 42% is really for a firm of that size that's really big growth. But we have 703% is just off the charts Congratulations!
Abraham:
To me technology is a game changer here. And I guess the question is what are you seeing in terms of how MPS you know are using technology in their proposition.
Heather:
So it's really interesting we asked about this and, and honestly not much there's you know some firms are offering a client portal where there's portfolio commentaries and, you know, they'll be alerted if there's going to be a rebalance before it happens so that if clients need to be taken out you need to withdraw that cash before it gets swept up into the rebalance. You can do that. It's really not not being done. And to me, the big gap is I think one that you're working on is if you can for particularly with clients retirement if you think about I think it's 60% of advised assets are for retired clients. And so and you'd expect that because the the need for financial planning increases as you know as the complexity grows and as you get closer to retirement. And so you'd expect the majority of assets to be in that's not a criticism of the advisor market. Some people seem to think it is that they've got old clients not enough younger of course they do. But anyway so advised assets for retirement clients and and you cannot combine the withdrawal strategy with the portfolio management strategy it's bonkers. So no wonder advisors are saying, well, I'll just do it myself because then I can figure out, you know, I can withdraw from the things that have grown the fastest in the last quarter, I can sell those down to deliver income rather than selling down across the portfolio and then rebalancing again when the clients get their statements there are like, what is going on? Why are there 50 transactions and it just it gives a perception true or not because you know most DFMs would say it doesn't cost and more. And our analysis suggests that actually advisors using outsourced DFM are paying less for funds and portfolio management than they are if they're doing it themselves. But the perception is that it's costly because, because customers recognize that when there's portfolio turnover that's going to drive up trading costs and it just seems inefficient and wrong. So it turns people off so that that gap in combining from a from a tech perspective, the withdrawal strategy with the portfolio management to me is going to be a big breakthrough for for this market.
Abraham:
That's incredible. And that gives me a lot of comfort. You know, I mean, it took us a while to figure this out, you know, so I think the revelation, you know, I think early last year for us, it was that, you know, there is this thing called financial planning, right? You know, so which way we do with Timeline, you do the risk profiling and all that stuff. Cash flow, you know, decumulation strats. You get all that nailed. And then, you know, on the other side, you've got the investment or the engine that drives the plan. We know the platform, you know, is just holding the investment. And to me, it's crazy that no one's managed to actually get the two are talking to each other, you know, in a way that we're dealing with in Timeline and Betafolio So you got the plan, the goals, the aspirations, you know, on one hand doesn't talk to the money and then you got the money. The money manager, in other words, the DFM, who has no idea what the money is for. So we'll see how that evolves. I wanted to get your thoughts on the growth of MPS generally and how far you think this can go. So this is a, you know, the advisor platform markets, the 600 billion market go into a trillion in five years time. And MPS is just what according to your research, 100 million, you know, to throw 20 million, you know, either side of that so that puts it at what you know, puts it at 15% of the advise platform. How do you see this evolving and how far can these go and how does it compete with the likes of you know multi-asset fund or advised, advised model portfolios or advise portfolios?
Heather:
So it is a small percentage as a percentage of the new assets it's higher than 15%. I think one of the, one of the issues that we have is an industry that anybody listening will be well aware of is it's really hard to change that book first from a client perspective, just you don't necessarily want to open up conversations with people to suggest that the portfolio strategy that you'd recommended in the past is somehow wrong. Right. That creates that friction that can cause people to to reevaluate the entire relationship. So you don't necessarily want to disrupt that. And with new money coming in, it's higher than 15%. I'd have to I'd have to look at our report to figure out what we've said about it. But in terms of how far it can go, I think it really depends because the there are you if DFM firms can combine that withdrawal strategy and some of the the financial planning elements into portfolio management, I think there's really big opportunity for growth. As I said, I think there's a lot of money to move from bespoke discretionary into models and and in our interviews with DFM. So that was one of the things that they pointed to is one of the big drivers of growth is that it's moving money across essentially within the business and I think there's a lot more room there. But the, you know, the potential is also that the tool sets get better for for advisors to run model portfolios themselves to ease some of the admin headaches and risk that happens around rebalancing. Know this idea of writing out to clients and in portfolio drift that happens it's possible that you know there's been a lot of work tried to be done to make that more automated but it's not there yet. I think it'll also be really interesting what happens with the consumer duty assessment or the the of new rules being proposed by the FCA to essentially build on from fraud rule. So if you have to assess the value to the client of the portfolio for an advisor a that's a huge piece of work to do that on an individual basis for clients. And so that might drive another, another lump towards outsourcing to two discretionary fund managers who would do that. But equally, there might be a lot more transparency about the cost and we might get a better sense of how DFMs can drive down costs. Because if you're running at a two or three person financial advice firm,
you're not going to have much pricing power with fund managers and DFMs, I think, need to be using that pricing power and that buying power to drive down costs. We're not seeing it enough. It's slightly lower. Advisers using DFM say that they're paying slightly lower for funds, but it should be a bigger difference because they're pooling that. That calling, that buying power. Now that only applies to active funds. So yeah. but that's 70% of assets on platform. It's still a huge proportion. So I think, I think there's a lot of opportunity for growth, but there's other things that might make advisor models easier or there's other things that might. Drive it further. I'm sorry, I went totally in circles there, as usual.
Abraham:
I like it. That's brilliant. You know, again your research you know sort of puts the active funds in terms of OCF or the underlying, underlying OCF around 40 to 80
basis points, you know, and I mean you see some model portfolios on your charts you know 1% and things like that. And I'm still wondering I mean I'm wondering how to get away with 80 basis points you know so, so to me it's like what battle should you be fighting as the model portfolio provider. So, so for instance our typical you know OCF is something in the region of 20 basis points right, you know and then you lay at nine basis points we could go out and you know indeed there's some work going on and you know sort of create some sort of competition between BlackRock and Vanguard and, and you know, dimensional to get that cost to say 18 or 15 basis points. Right. You could fight that battle there's maybe five basis point of facts to remove or frankly debate from an adviser that's paying 70, 80 basis point for active management in the sense that you could you know, the reduce the cost by 75% just from making that move. And so to me it's like what battle do you want to fight using your scale as an MPS provider to knock off or shave off a few basis points you know, of the price or actually the the biggest impact comes from an adviser making the move from you know say expensive active portfolios to, you know, a lower cost one.
Heather:
So I'm not an investment expert, so I'll leave the investment arguments to you Abraham but I think you've you've articulated a compelling scenario there. And I think, you know, in terms of of where to focus, what we hear from advisors is their main consideration. So there's been this big increase in use of multi-asset. At the same time as we see this increase, MPS and the driver for that is about reducing business risk and simplifying the advice process. And that's so important because advisors are constrained in their opportunity to grow, in their opportunity to serve more clients. And so it's really difficult to hire anybody at the moment. You know, you can't you can't hire financial planners, para planners. Their salaries have my understanding is about doubled in the last year. It's it's very difficult to bring people into financial advice firms who are ready to do the job. And there's also a great initiative to try and train people up. But that's a future pipeline. It's not today. So you've got these constraints on advice businesses that advisors can deal with about 161 clients per advisor. They're not saying that they want to deal with 500 because then it's hard to have those one to one relationships. But how can you spend more time on the things that matter most and the things that matter most to the clients are not the portfolio management. And, and most clients don't care. They trust the adviser. We've done loads of focus groups over the last couple of years. One of the best things of lockdown is that the cost of doing a consumer focus group has dropped dramatically because you don't have to hire one of those stupid rooms with the double glass. You just have it on Zoom and you can mute people if they start to dominate the conversation. It's brilliant market researcher. But when we talk to them about their choices for investing in ESG funds, for example, or investing in passive versus active, or we ask them about use of tools, they say I trust My advisor. My advisor thinks it's the right thing to do. I trust them because they know me. They know what I'm trying to do. So, you know, if I were you and I think you are doing this, I'd be thinking about how do I focus on what my advisors need to be able to grow their business to reduce risk to the business, deliver better client outcomes, better client journeys, better client experience to help them to then focus on the business of helping their clients plan so that they can grow their businesses in the way that they want and then the shape that they want. And so whether it's shaving off two bits here or there, I don't think that's going to really move the dial and we've seen fantastic evidence that of people who see planners save much more for retirement, they suffer much less stress in terms of their financial sense of well-being. There's all sorts of good things that come out of financial planning. And so the more that providers can focus on helping to make the business of advice easier, the better, in my view.
Abraham:
That's that's a brilliant segue to my next question. You know, in terms of what you see happening in the platform markets, you know, you have the likes of, you know, circle, you know, fundment, the new upstarts, in that space with perhaps a slightly different business model than than the established. So this idea of, you know, a small advisor firm it goes, white label is the wrong word, you know, but this idea of them owning an operating platform because, they are frustrated by the slow pace, I mean, if you can even call it that, of innovation, you know, with platform we don't have for the vast majority of large platforms digital account opening process is still a problem. You and I disagree on the definition of a digital signature because I don't believe that, you know, just batching the same old form to clients just to get DocuSign on it, or printing the form and signing and scanning back is a digital signature but you seem to think so.
Heather:
No, no we don't. We treat the same as a wet signature because to us they are the same we separate them out in our tables. But when we recognize digital process champions it's that they require less than I think it's 20% of forms require a scanned copy or paper signature. But of course the best way to go is to straight through processing. No, no no scanned copy is the same as a wet signature. I agree. 100%.
Abraham:
So, so in that regard, I mean this, this idea of advisors becoming platform managers and you know, controlling it in some shape or form? Where do you see that going?
Heather:
So, so we did a report at the beginning of last year. Again, it was another free report because we tried to get sponsors and they all wanted to control what we were saying about them. So we're like, forget it. We'll just do it for free because this is crazy. I think that the control that these firms were trying to put in, and I agree, white labeling wasn't the right type of use that because we were talking to advisors. That's the terminology they were using. So we thought we'd just use the terminology, the customer. But it's probably wrong. We should have we should move that on. But it's a free report on our website spectrum of white label platform, and there's all sorts of stuff in there about what it takes to run your own platform and the considerations to go through why people are doing it, what to consider. And 360 also did a really good paper on this topic. So, so I mean I think it's really, really interesting what's happened. It's great that there's innovation. Are we going to see this, you know, this stampede towards firms launching their own platform. We certainly seem to be seeing it. When we published our paper at the beginning of last year, half of firms with over 250 million or more in assets said that they were planning to launch their own platform in the next three years. And that was a huge number. Right. It's, it was it was pretty astonishing, but that's dropped off pretty significantly. It wasn't as big of a sample so we didn't publish the figures, but it dropped down to about about a third of firms in that category who were thinking about it. And, and it's not that those white label or the bespoke platform providers won't move their proposition on. But back to that question about what is it that you're doing as an advice firm and what do you want to have ownership for do you really want to have cash responsibilities? And I know that there's lots of great sales literature from those white label providers saying that you don't have to have the cash responsibility but if you look at the regulator's definition and look at what 360 publish if you tell your clients it's your platform, you are responsible for that and you cannot outsource that to the platform provider. So you have to be really aware of what it is you're doing it and why you're doing it. And the interesting thing is I think there was a perception that firms were doing this to get a few bips. That was actually the last reason that came up in conversations with firms. It's about operational efficiency, the nightmare of the tech. The real problem, in my view, is the back of the systems, and we see it in our data. When we survey advisors, we ask about the tech they're using platforms get pretty good reviews where there's a lot of frustration as the back office systems. And so, you know what we're seeing all this innovation around platform because it's so hard to move the data. And so are you really going to are you really going to do that or are you going to try a new platform, you know, back off the system when you have to clean the data, invest a huge amount to get that ready, move it across that it's not going to be perfect. Let's be honest.
Abraham:
Yeah, I'm moving across to where, you know, so. That's really, really fascinating stuff, Heather. There's a lot I haven't even covered you know, two thirds of my questions with you, but I have to for for the sake of your time. And then, of course, our listeners getting bored of me yammering on. I have to try and wrap this up. So tell us a little bit where we can find you you know, you mentioned your your advisor panel. Anything that comes to mind that you want our audience to know or to do.
Heather:
Great! Well you should definitely come see Abraham speak at NextWealth live on 22nd of March because we'll have another conversation about advisor tech that's so that that's one thing. And then the research panel we really want to hear from people working in financial advice businesses so the NextWealth directory or so the NextWealth panel if you Google that you can, you can sign up and then get free access to all of our research. And if you're at work in a financial advice firm and, and you can share your views so that we can aggregate those up and try and change the industry for good.
Abraham:
Heather Hopkins, thank you very much. For your time and wisdom. Thank you for coming on the podcast.
Heather:
Thank you. Abraham it's a Delight.