Dunstan Thomas: bright future for platforms
Platforms are on the cusp of a massive boom and could see a tripling of assets under management in the next 18 months, according to research.
Dunstan Thomas. a provider of technology solutions for the pensions and investments market, conducted a survey of 16,000 IFAs and 402 pensions firms.
It found that nearly half of pension providers and 37 per cent of IFAs predict that by the end of 2012 more than £300bn of assets will be held on wrap platforms, up from £120bn today.
Chris Read, chairman of Dunstan Thomas, said that IFA and provider opinion was surprisingly aligned compared to previous years. He said the findings revealed a remarkable amount of agreement and similarities between the groups.
He said: "This year there was such close alignment in their thinking and we asked ourselves why this was the case because usually they hate each other. Our interpretation was that it is the providers who are becoming more aligned in their thinking with IFAs and distributors and that is because of the retail distribution review.
"For instance, the same data two years ago was anti-platform on the part of providers, who saw it as a threat. Now platforms and the RDR are a reality and providers have to align themselves with platforms because that is the future of distribution."
According to the survey, 35 per cent of providers are building their own platforms, 16 per cent are repackaging an existing one and 19 per cent plan to unveil a direct-to-consumer platform.
Despite the pressures of RDR, 39 per cent of IFAs said the single largest financial pressure was the rising levies of the Financial Services Compensation Scheme. Only one-quarter cited RDR preparations as the most costly area.
In an overwhelming condemnation of the FSA, 72 per cent of IFAs said the regulator's tight definitions of 'independent' and 'restricted' advice were wrong.
Anthony Badaloo, principal of Hertfordshire-based Church Hill Finance, said: "It is inevitable that platforms will grow. Wraps are the administrative technological evolution of the industry. They have taken the industry forward one step and given advisers have the opportunity to cut costs and reduce administration.
"The time will come when people will have to justify why they are not putting clients on to a wrap. It gives access to a range of instruments unmatched in any other format and is cheaper. The FSA is happy with the wrap concept and it will be the norm in the coming few years."