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‘Some are going to get crunched’: Future of platforms debated in first ever EmbarkPod

Embark CEO Phil Smith and Head of Platform Strategy Alistair Wilson discuss digital disruption, DB transfers, ESG, pricing and more in group’s inaugural podcast…

Pure-play digital advisers are unlikely to win out against traditional firms, even in a more remote world, according to Embark CEO Phil Smith.

Though more adviser firms are embracing technology – and leaning on providers and platforms to drive the change – it doesn’t necessarily mean the further they go the more success they will have, Smith argued.

Phil Smith was taking part in Embark Group’s first ever podcast, alongside Head of Platform Strategy Alistair Wilson and host Roger Hearing, presenter of the BBC World Service’s flagship news and current affairs programme Newshour.

Digital only advice solutions won’t trump face-to-face advice, and evidence can be found in the story so far of robo-advice, Smith said.

“If we look at the emerging robo sector, what have we learned so far in its infancy? he asked.

“We’ve learned there are clients out there to get, so that’s good news. We’ve learned that the average investment ticket is pretty small, compared to the IFA segment, so it’s hard to build asset scale, which is very key, at any kind of pace, [and] we’ve discovered that the average cost of client acquisition is higher in a digital distribution environment than it is in a face-to-face.

“[So we] see that we’re having to pull clients into it rather than feed a ready market, whereas conversely in the face-to-face advice channel there is an under-supply of advisers to client demand; the challenge is a different one.”

Wilson said the industry, spurred by changes affecting all sectors as a result of the current pandemic, had seen an acceleration in the use of digital tools, but that advisers would also consider client need first and foremost.

“It is important that advisers get involved in the technology but equally so they can’t run ahead of their clients,” he said. “They can encourage them to adopt and adapt into a newer world, but at the same time it’s still important an adviser deliver the services their clients want.

“Not all clients will want a full digitised solution; they will still want face-to-face interactions. Admittedly more will want simple access via handheld solutions. It just depends on what the clients are looking for, and we can’t lose sight: it is the client here who is important, then the adviser, then the platform.”

Smith and Wilson discussed several other topics in the podcast. Here are some highlights:


Phil Smith: “I’ve gone from sceptic to neutral – I’m old enough and grey-haired enough to have lived through the bubble of interest in SRI back in the early 2000s. Many of the same features in the market were there then that the world would move in that direction very quickly, and it never really caught fire in the way that people expected. However, I have a couple of early 20-year-old daughters, both of them are fully embedded and talk ESG language and want to see that in the things they buy, so I think through natural demographics ESG will take hold this time. The real acid test will come back down to investment returns relative to risk, and whether the ESG type overlays on investment portfolios either match, beat or underperform traditional non-ESG related product. Because ultimately I do believe that return is king.”

On platform price v service v functionality

Alistair Wilson: “Clients and advisers will be sensitive to all of them at different stages. So clients may have enjoyed a lower price accumulation model in their pensions for the last 20 years but, when they start to extract that money and perhaps take their PCLS payments, if they then have to wait two weeks for that the overall view of cost v service and ultimately value comes hurtling straight back at the provider and the adviser to have to re-think what the strategy is.”

On owning or licencing platform technology

Phil Smith: “Seven years ago, when I formed Embark, I had to make this choice: do we spend capital building our own or do we partner up with a major provider, and I came to the quick conclusion that I would have to be stark raving nuts to build my own, and here’s why…”

Listen to EmbarkPod

You can listen to Embark Group’s first ever EmbarkPod – and all future episodes – on a number of major podcast platforms, including Apple, Spotify and Tune In.

Alternatively, download the first episode as an mp3 by clicking this link

About EmbarkPod

EmbarkPod is a show that looks to bring together thought leaders, finance professionals and commentators to discuss - and debate - hot topics within the FinTech industry; hosted by Roger Hearing.

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