Like rain on your wedding day

This is how I like my irony, my friends…

IFAOnline reports here that the first automated re-registration has taken place using the new framework developed by Origo and Altus as part of the TISA Exchange (TeX) club. This aims to get re-reg down to a few days from weeks or millenia or whatever it takes at the moment.

The first re-reg was between…FundsNetwork and Skandia. Talk about Damascene conversions – two companies that got a reputation (deserved or otherwise) for sitting on client assets as a chicken sits on an egg now embracing the free transmission of assets without requiring clients to sell down assets or perform some sort of obeisance for the pleasure of changing administrator. If Alanis was writing her song now, that would be a strong candidate for edging out the one about ten thousand spoons (this is a great chance to link to Ed Byrne’s famous bit on Ironic, always worth another watch)

Re-reg interests me. I know, I know. But it’s a big issue for us in the sector – a major barrier to changing platforms and a reason that assets languish on once-favoured platforms (if we’re being advisers or receiving platforms) or a major positive contributor to persistency rates (if we’re being ceding platforms). The question is, why do we care so much?

We might care about out of market time, but that can work for clients as well as against them. We might care about CGT, but the vast majority of platform clients aren’t lucky enough to have to worry about that (with an average of £160k or so on platforms and the vast majority of that in ISAs and pensions). So what’s going on?

My theory is that the adviser community, in stressing re-reg, is demanding that platforms live up to the promise they once showed. Total access. Total transparency. Total portability.  A hotel, not a prison. Many have done this already, but it’s telling that the first companies using TeX’s new facility are two major providers who have some way to go in convincing advisers of their post-RDR clean proposition.

That’s particularly brave, because if advisers do see these considerable and very welcome developments as a freeing up of previously done-up-like-a-kipper assets, a large amount of AUA could come into play very quickly. Having just spent an unreasonable amount of time on rebate comparisons and total cost of ownership stuff for a client, the case for moving clients on cost grounds is often pretty marginal even with clean vs bundled share classes.

Hypothesis: re-reg being a pain in the Ronson (rhyming slang, think about it) is enough to stop a lot of migration activity. Much of this will be from the Big 3 or from holdings direct with investment managers; that’s life. The beneficiaries will be the platforms who crop up in the top flight of surveys like the recent Investment Trends work (see Money Marketing here). This will cause a power shift, not least in the commercial negotiating power of the platforms in the league beneath the £15bn plus gang.

If that’s true, what is on face value a relatively obscure development could spark a big shift in the platforms landscape. This might take 18-24 months, maybe more. But it’s something platforms, fund managers and advisers should keep a close eye on, for giggles if nothing else.