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Now platforms are even more central to the advice process

Increased complexity around savings and investments post Budget is creating greater need for advice and for central hubs like platforms, says David Thompson, managing director, AXA Wealth, Elevate

The savings and retirement market was already undergoing fundamental changes due to societal and demographic shifts, so to then experience the 2014 Budget revelations means we have all had to take a step back and think about the impact for consumers and the financial services industry.

But what is the likely impact going to be for investment wraps and platforms? All in all it is hard to see it as anything but positive news.

ISAs are becoming more flexible with greater contributions allowed. Pensions are becoming more flexible, with the ability to take your money more easily.

All of which means the focus for consumers is maximising savings and income across multiple tax wrappers. So financial planning advisers, and their clients, now need to more easily spread wealth over multiple tax wrappers; to have a holistic view of their investments across these tax wrappers; to have flexible ways of retrieving income across these tax wrappers; and to have a place to store the monies once they have been taken out of the pension, in a way that allows continued investment.

In other words: a platform.

Central hub

Platforms can provide access to new investment propositions that are likely to be developed to meet the changing demands from clients. But most importantly, platforms can act as central hub for advisers, and their clients, to collate in one place a lifetime’s worth of savings, which will be a vital first step in then providing the necessary financial advice about the best products or wrappers to use and how to then provide a tax efficient income in retirement.

Pensions are certainly a key part of this but as I have said the new ISA rules means they are likely to become an even more integral aspect of retirement savings. The flexibility both within ISAs and across different tax wrappers will also become more important, another key aspect of modern wraps and platforms.

It’s also good news for IFAs, as there’s so much complexity in balancing investments and income over tax wrappers that consumers will need an adviser to help them work out how much income they can afford to take.

Increased investment inflows

It was widely predicted that the 2014 Budget would accelerate flows onto platforms. As a business we were ready for the introduction of the new ISA rules in July and expect this to have a positive impact on asset flows ahead of wider changes to the pension rules planned in 2015.

As well as increasing the overall annual tax efficient allowance, the new ISA arrangements give investors greater flexibility to keep or move money into cash while they consider where to invest. This should increase the appeal of this already popular tax wrapper and help clients invest more tax efficiently. As part of our offer from 1 July those choosing to hold money in cash, prior to investing, currently receive an improved rate of interest of 65bps. Advisers are also able to choose from a range of cash like funds that are now available within the new ISA wrapper on the Elevate platform.

So overall how can platform providers support advisers in this new retirement process? We can ensure we provide the right tools to enable advisers to carry out the required services for their clients. We must continue to invest in our proposition to meet the new demands both from legislative changes but also changes in consumer demand. Whether this is the new ISA rules that came into force in July, the new pension rules from next year or the potential new demand for income generating investment options.

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