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Platform looks to ‘disrupt’ market with low cost route for adviser firms to mass affluent

7 November 2017

Embark Group has launched a new lost-cost open architecture platform, designed to help close the advice gap.

Embark said the platform would “materially disrupt the current platform market”, delivering a cost-effective service to mass affluent consumers with between £25,000 and £150,000 to invest.

Users of the platform will have access to over 4,000 mutual funds and securities and around 3,000 ETFs, the group said.

The platform will offer third party investment account services for as little as 0.10%, but Embark said the most critical factor was the cost of the platform for retail and mass affluent clients. During the platform’s launch period, this will be a flat 0.15% for general investment accounts and ISA-based services, regardless of the size of assets invested.

Embark said its decision to launch the platform was driven by its goal “to pass value back to consumers” whether they come as intermediated, execution-only, robo or fully advised clients.

Chief executive Phil Smith said: “The Embark platform will enable financial advisers to address the advice gap through cutting edge, highly reliable technology. There has never been a greater need for financial advice, although in recent years access to ‘full fat’ human advice has largely become the domain of the more affluent.

“This ‘advice gap’ is amplified by pension freedoms. Even though an individual’s decision to access their pension savings is one of the most complex they will make, according to the Financial Conduct Authority less than a third of savers and investors are taking any professional advice. It largely boils down to cost. Financial advisers find it difficult to profitably service those with limited assets. Recent research indicated that 69 percent of advisers have turned away potential clients in the past year.

“To address this issue, the recent Financial Advice Market Review called for “new and more cost-effective ways of delivering advice and guidance to consumers”. The Embark Group has stepped up to the plate and developed a new low-cost open architecture platform to help advisers fill the advice gap.”

The platform makes use of straight-through processing to automate all the major processes, Embark said, and will provide real-time transactions, require no paper signatures and will support users via online chat, phone and email.

The platform will also soon offer a wide range of model portfolios from investment managers, including BlackRock.

Joe Parkin, Head of iShares UK Retail and Wealth at BlackRock, said: “The winners in the future will be advisers that can intelligently combine ‘human and machine’ to consistently help people achieve their long-term financial goals. Embark has developed a platform that does just this, bringing together technology and asset allocation models – built with efficient, low cost and transparent ETFs – to directly address the need of the modern adviser. This is a thrilling development that sets a new standard for the UK industry.”

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