Finn Houlihan is the Managing Director at The Arlo Group and Founder and Managing Director at ATC Tax. He is a Chartered Financial Planner providing tax-led financial planning advice to the UK and overseas clients, specialising in Portfolio management, Retirement planning, and Inheritance tax planning. We caught up with him to find out more about the current investment space, and the transitions currently occurring
Looking over the last decade, what are the biggest changes that have occurred in the investment platform landscape in relation to the customer?
It’s important to look at why investment platforms were developed in the first place. Going back 10 years, many clients had funds held directly with the institution, such as Invesco, JP Morgan, or HSBC. From an admin perspective that was incredibly difficult to manage.
Platform technology was a massive game-changer in organizing customers’ investments into one place where they could get more involved in the investment process. Clients could view the performance of their portfolio collectively whenever they wanted and could drill down to individual fund performance. This took a lot of the pressure off advisers in providing updates to clients on performance.
Equally, when it comes to expat clients, the development of offshore platforms has been crucial. Traditionally these clients would have offshore bond structures and life bonds, and in the last 10 years, there’s been a gradual shift into offshore platforms to help them manage their investments when they are in jurisdictions that are less financially developed than the UK.
Additionally, the implementation of Open Banking has been very significant. Allowing people to have access to all of their investments across platforms, and their bank account information in one place is an incredible development and one which is making people’s lives easier. This is something that will continue to grow in prominence.
The development of robo-advice has also been significant, with many suggesting that it would make human advice obsolete. However, the initial uptake hasn’t been as groundbreaking as first anticipated. There has been more demand for ‘do-it-yourself’ advice – such as with Hargreaves Lansdown and AJ Bell – where the individual takes the risk on themselves using the research provided.
ESG is a big trend right now - is this something that will continue to preoccupy investors for the foreseeable future?
ESG has and will continue to preoccupy investors' minds in the future. Traditionally, ESG was seen as a more risky investment option, however as larger blue-chip companies developed their ESG offering, the market became more stable. This can only be a positive development - redirecting people’s money to have a positive impact on society and the planet.
In the future, it would be good to see further government incentives for ESG investments, such as by providing tax breaks for investors, or government protection in order to develop further flows into these products. There would then be a clear incentive for investors, and advisers would be able to provide better outcomes for their clients by helping them achieve better returns on their investments.
The current political and economic climate has raised considerable investment challenges. How is the industry coping with this in terms of customer protection and offering value?
Looking at any chart tracking financial markets over the last 20-30 years, you can pinpoint political and economic events and we are currently leading up to one of these adjustments. However, it is disastrous where we are now with inflation at a 40-year-high - interest rates will have to go up further but that will clearly have a catastrophic impact – it may lead to a real recession, something commentators have been predicting recently.
What is key here is that financial advice is going to be increasingly important. Advisers must help educate their clients on the risks and work with them closely, so they have full transparency. This is what platforms are helping with.
What should customers look for in a new investment platform - what elements are critical to success, and which add the most value?
When looking for a new investment platform, customers should look for easy access to their account information. Ideally, they should be provided with as much information as possible. This could include full portfolio performance data, underlying investment performance data, investment tools such as tax tools, unused capital gains, and confirmation of income paid. The more information the better, but it must be provided in a manageable and personalised way.
The initial setup process also needs to be as frictionless as possible. With an aging population, many clients need to have a platform sign-up process that is seamless and doesn’t put them off investing.
If you could look a decade into the future, what would the investment space look like?
In the future, I would expect the development and continuation of what we are seeing currently. Smartphone tech and apps that are linked to Open Banking will be key – giving people access to all of their investments, pensions, savings accounts, and bank accounts so they can manage everything from one place.
One of the largest unknowns will be whether AI and robo-advice will develop to an extent where people begin to trust it and use it more willingly. However, there will always be a place for human face-to-face advice. People like dealing with real people, especially when the financial outcome is critical to that person or their family’s future.