D2C Platforms: a new world view or faster horses?RSS icon

Written by Adam Jones, Guest Blogger on Monday 29 September 2014

Direct platforms are getting better. Huzzah and hooray. Roll out some flags, hoist up some carpets and mix some metaphors. Only a short while after most other industries (cough), we have usable websites with cross device technology. It’s not painful to add cash and invest. If you want to see your holdings, you don’t have to wait days or play around with ridiculous tables. You can even see the performance of a fund… by clicking on it. Revolutionary.

Incremental change has its drawbacks

This isn’t true across the board, but all in all, it’s relatively positive. That said, there is a problem hiding beneath the rounded edges and flat coloured graphics of many new and reinvented investment platforms. Almost all of the gains we are seeing are incremental. Don’t get me wrong, my software development background taught me to embrace regular small innovation. But, incremental change has its drawbacks.

While it appears unlikely that Henry Ford actually said “if I had asked people what they wanted, they would have said faster horses,” the sentiment is still appropriate. Incremental change can only get you so far. To become a market leading innovator, you need to take a fundamentally different approach. A different world view, if you will.

Advice and its relationship with platforms is a perfect example for me, and it pulls apart what a ‘direct’ platform really is. We are used to the idea that an intermediated platform allows the adviser to run their business, and that a direct platform is a platform which does not offer advice. Continuous innovation in this area will lead to faster versions of these horses.

Disconnecting the concepts of ‘advice’ and ‘direct’

A new world view however, would fundamentally reassess the platform. A truly progressive and innovative business would disconnect the concepts of ‘advice’ and ‘direct’. Instead, a direct platform would be one where the relationship is owned by the client. They can take the services that suit them, when they need them. They might run a risk profiling tool today, invest some money next month and take full face to face advice in a decade. Importantly, the platform is offered to them as a user, and advice becomes a product offering from the platform provider.

Advice is just the tip of the iceberg in terms of different world views. Don’t get me started on why ‘advised’ and ‘direct’ platforms are different things, why aggregation of your financial life isn’t commonplace, why my platform can’t tell me everything about me without asking 300 questions and why most platforms still think 3000 funds is about right. But at least it is a starting point.

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