And finally, what if passive funds
take over the world? Do we really
need an investment platform if we
can buy ready-made portfolios of
passive funds straight from the fund
manager, avoiding the need to pay a
platform fee?
It’s all a bit like the UK car industry
of old. Remember those wonderful
old brands we used to have – Humber,
Rover, Triumph, Hillman, Wolseley
and Austin?
No one within the industry
is sure why it’s so expensive
to build this platform
technology, but we have
been advised that it just is
platform technology, but we have
been advised that it just is.
Many customers are required to
invest all their money on a platform
before it can become economically
viable.
Streamlining
And to compound the problem, the
Is the UK platform industry going
cost of recruiting new customers via
to follow suit? The answer is almost
advertising is also sky-high. There’s
certainly yes. The problem in the
the story of Nutmeg, the UK’s leading
UK automotive sector was that it
robo-advisory business, spending £3
was extremely expensive to develop
of marketing money to acquire £1 of
new products, while a large number
client assets.
of manufacturers independently
Sure, it takes a while for a new
investing in future vehicles for
type of investment platform to find
relatively low sales volumes killed
traction, but there’s only so long a
profitability. We won’t mention
company can keep spending more
militant workers, poor build quality
money than it is making.
and international competition, but the
The best way to attract customers
point is that you need scale to succeed. without breaking the bank and taking
In the case of our platform industry, an age is to buy somebody else’s and
the cost of building the robust
this is what interactive investor has
technology that you can trust to
been doing. First, it bought TD Direct
administer £260bn of our money is
Investing, then Trustnet Direct,
eye-wateringly expensive.
Telegraph Investor, Alliance Trust
No one within the industry is sure
why it’s so expensive to build this
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