Platform Report 2023

The Boiling Frog

No animals were harmed in the writing of this report! 🐸

Integrated, flexible, accurate risk profiling at no cost

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Platforms Rated

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A long Year!

A year is a long time in platform land. A lot has changed. Yet, things remain the same. Is that because the pace of change is too gradual for us to notice? Are we in danger of getting slowly boiled to death like the proverbial frog?

You are familiar with the popular metaphor of ‘slowly boiling a frog to death’, aren’t you? The story goes that if you put a live frog suddenly into boiling water, it will jump out. However, if you put the  frog in tepid water which is then slowly boiled, it will not perceive the danger and will be cooked to death.

It is a powerful allegory often used to illustrate how we are often unaware of and unwilling to react to sinister threats that result from gradual and unnoticed change.  The only trouble is, the boiling frog metaphor is an urban legend! It doesn’t stand the test of modern scientific rigor.

It’s hard to pinpoint the exact origin of the metaphor, although it is often attributed to  19th-century naturalist Thomas Huxley. Modern biologists believe that the premise is scientifically inaccurate. Frogs are ectothermic, meaning they regulate their body temperature based on their environment. This is key to their survival in the wild. If you were to gradually increase the temperature of the water, a frog would likely sense the change and try to escape before the water became dangerous. READ ON 🐸

Rewatch Our Webinar

On Wednesday 14th December 1:00 – 2:00 pm, we hosted our annual platform webinar. In which we discussed the core points of the report.

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The Bottom Line

For the first time in over a decade, assets on adviser platforms declined, from £710bn to £655bn in 2022, a 7% decline relative to the year before. Given that this was a difficult year for the market with a Global 60/40 portfolio experiencing 10% decline, perhaps this should be seen as a sign of market resilience.

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Your Margin is  My Opportunity

Thanks largely to interest margin on client cash, yield on assets improved meaningfully from 24bps to 27bps, reaching the highest level over the past 5 years. There is a stark contrast in the difference between the yield on assets of the new entrants such as Fundment and P1, and the incumbents, many of whom command yield in excess of 0.25%.

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Slowly, Then Suddenly

Once asked how change happens in the platform market, sector analyst, Ernest Hemmingway, replied ‘slowly, then suddenly.’  Much of the consolidation in the sector in the past few years is largely a consolidation of balance sheets and logos, rather than that of technology and propositions.

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Join Our Webinar

Wednesday, 6th March 11:00 am – 12:15 pm

We're hosting a webinar on all things Platform Report 2023 that you won't want to miss. We delved into the essential aspects of the report, leaving no stone unturned.

Platform Report 2023

The Boiling Frog

No animals were harmed in writing this report! 🐸

Calculating capacity for loss properly

Risk profilers typically tend to try to measure Capacity for Loss by asking questions about the stability of your income sources, but those in supposedly 'stable' jobs can one day be made redundant unexpectedly, while many self-employed people might have stable income for years.

Timeline's Risk Profiling integrates with Timeline's Financial Planner, and calculates a client's capacity for Loss based on an analysis of how their financial plan would fare across hundreds of scenarios from 120 years of history.

 

Risk-Profiling-Academic_C2

Calculating capacity for loss properly

Risk profilers typically tend to try to measure Capacity for Loss by asking questions about the stability of your income sources, but those in supposedly 'stable' jobs can one day be made redundant unexpectedly, while many self-employed people might have stable income for years.

Timeline's Risk Profiling integrates with Timeline's Financial Planner, and calculates a client's capacity for Loss based on an analysis of how their financial plan would fare across hundreds of scenarios from 120 years of history.

Risk-Profiling-Academic_C2

Matching a client's score to the right portfolio

A score for a client is not so useful if it cannot be accurately matched to the right portfolio.
Again, using our huge financial dataset looking at returns, volatility and asset type we can accurately score any portfolio you add.
You will see the client's score and their portfolio's score next to each other, so you can clearly see if they match.