Full Sipps have risen to the top of financial adviser wish lists for the most desired products on investment platforms as demand for annuities and income drawdown falls, new research shows.
A CoreData Research study surveying nearly 1,000 UK financial advisers found a quarter of respondents (23.6%) would most like to see full Sipps and/or other complex pension products on platforms. Annuities and income drawdown (21.5%) and discretionary investment management services (17.4%) complete the top three products or services advisers want on platforms.
This year’s study sees full Sipps and/or other complex pension products replace annuities and income drawdown at the top of the platform wish list — a position they had occupied since 2014. Demand for annuities and drawdown is down significantly from last year when 33.7% of advisers said they would most like to see these products on platforms.
“A key finding in this year’s study is the growing demand for full Sipps at the expense of annuities and income drawdown,” said Craig Phillips, head of International, CoreData Research. “Sipps are proving a popular option in the post-freedoms world for investors seeking greater flexibility, choice and control.”
In addition, the study shows adviser demand for ETFs is rising (11.4% vs. 5.3% in 2017), especially among those serving the mass affluent and mass market sectors.
“As ETFs become more widely accessible and available in different variants and investors continue to search for cost-effective solutions, we expect demand to grow further,” Phillips added.
The report also underlines the need for platforms to ensure they have robust cybersecurity defences. Seven in 10 advisers (69.6%) say they increasingly consider whether a platform has adequate cybersecurity systems and controls in place when choosing a provider.
Meanwhile, platform business volumes are set to expand. Nearly four in 10 (38.7%) advisers plan to increase business on their main platform in the next 12 months — up from 34.3% last year. And a higher proportion of advisers intend to add more platforms to their offering (20.5% vs. 15.3% in 2017).
These positive market fundamentals are bolstered by growing usage levels. Nearly seven in 10 (68.1%) HNW/UHNW focused advisers now use platforms on a daily basis, compared to 58.6% in 2017, while daily usage among advisers focused on mass market clients has increased from 42.9% last year to 49.2%.
The CoreData study further reveals that adviser remuneration features, reporting capability and retirement advice/services are the top three satisfaction drivers on main platforms. The greater focus on adviser remuneration features (20.1% vs. 12.1% in 2017) and reporting capability (19.5% vs. 16.8% in 2017) highlight some of the regulatory pressures facing advisers including new MiFID II requirements.
Products or services advisers would like to see on platforms (prompted)
Full Sipps and/or other complex pension products: 23.6%
Annuities and income drawdown: 21.5%
Discretionary investment management services: 17.4%
Life insurance and protection products: 13.4%
Corporate adviser products (e.g. group risk and group pensions): 4.7%
General insurance products: 2.1%
Loans and debt management services: 0.7%
Other: 3.7 %
When choosing my platform provider I am increasingly concerned about whether it has adequate cybersecurity systems and controls in place
How likely is it that you will add one or more additional platforms to those you currently use over the next 12 months?
Very likely: 8.6%
Very unlikely: 34.0%