Finn Houlihan is Managing Director at The Arlo Group and Founder and Managing Director at ATC Tax. He is a Chartered Financial Planner providing tax-related financial planning advice to UK and overseas clients, specializing in portfolio management, retirement planning and inheritance tax planning. We caught up with him to learn more about the current investment space and the transitions happening right now
Looking back over the last decade, what are the biggest changes that have occurred in the investment platform landscape in relation to the client?
It is important to look at why investment platforms were developed in the first place. Going back 10 years, many clients had funds held directly with an institution such as Invesco, JP Morgan or HSBC. From an administrator’s perspective, this was incredibly difficult to manage.
The platform technology was a huge game changer in organizing clients’ investments in one place where they could become more involved in the investment process. Clients could review their portfolio performance collectively whenever they wished and could review individual fund performance. This has taken a lot of pressure off advisors in providing performance updates to clients.
Likewise, when it comes to foreign clients, the development of offshore platforms is crucial. Traditionally, these clients would have had offshore bond structures and life bonds, and over the past 10 years there has been a gradual move to offshore platforms to help them manage their investments when in jurisdictions that are less financially developed than the UK.
In addition, the implementation of Open Banking was very important. Allowing people to access all their investments across platforms and their bank account information in one place is an amazing development that makes people’s lives easier. This is something that will continue to become more prominent.
The development of robo-advice is also significant, with many suggesting that it will make human advice obsolete. However, the initial take was not as groundbreaking as initially expected. There is more demand for DIY 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 – will it continue to concern investors for the foreseeable future?
ESG is and will continue to occupy the minds of investors in the future. Traditionally, ESG was considered a riskier investment option, but as larger blue-chip companies have developed their ESG offerings, the market has become 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 additional government incentives for ESG investments, such as providing tax breaks for investors or government protection, to develop additional flows into these products. Then there will be a clear incentive for investors and advisers will be able to deliver better results for their clients, helping them achieve better returns on their investments.
The current political and economic climate has posed significant investment challenges. How is the industry dealing with this in terms of customer protection and value proposition?
Looking at any chart tracking the financial markets over the last 20-30 years, you can identify political and economic events, and we are currently leading one of these corrections. However, it is catastrophic where we are now with inflation at a 40-year high – interest rates will have to rise further, but this will obviously have a catastrophic impact – it could lead to a real recession, something commentators have been predicting recently.
The key here is that financial advice will be increasingly important. Consultants should help their clients be aware of the risks and work closely with them to have full transparency. That’s what platforms help with.
What should clients look for in a new investment platform – which elements are critical to success and which add the most value?
When looking for a new investment platform, clients should look for easy access to their account information. Ideally, they should get as much information as possible. This may include full portfolio performance data, key investment performance data, investment instruments such as tax instruments, unused capital gains and confirmation of income paid. The more information the better, but it should be provided in a manageable and personalized way.
The initial setup process should also be as seamless as possible. With an aging population, many customers need to have a platform sign-up process that is seamless and doesn’t turn them away from investing.
If you could look a decade into the future, what would the investment space look like?
In the future, I would expect a development and continuation of what we are currently seeing. Smartphone technology and apps that tie into Open Banking will be key – giving people access to all their investments, pensions, savings accounts and bank accounts so they can manage everything from one place.
One of the biggest unknowns will be whether AI and robo-advice will evolve to the point where people begin to trust and use them more readily. Still, there will always be a place for face-to-face human advice. People like to work with real people, especially when the financial outcome is critical to that person or their family’s future.