Left standing at the platform

A future challenge for both platform providers and IFAs is to serve this group. The evidence from other platform markets, such as Australia, is that affluent, direct investors can bring platforms to profitability at a faster rate, making them an attractive market niche. These individuals may also split their assets between assets under advice and assets they wish to invest themselves, so IFAs can still form relationships here, provided they recognise the nature of these disenchanted, or more worldly wise, clients.

Another effect of the global financial crisis has been to apply a slight touch on the brakes to platform adoption. Only 10.4 per cent of advisers say they are very likely to adopt a new platform in the next 12 months in 2009, compared with 15.8 per cent in 2008.

As well as looking at adviser sentiment, the research benchmarked platform performance on the criteria of functionality, product and investment range, platform fees and underlying costs, platform service to advisers, platform support to advisers and reporting capability. It is beyond the scope of this article to go into much detail here, but only around a fifth of IFAs are promoters, or loyal and enthusiastic advocates of their main platform.

At the other extreme, over a quarter of main platform users and even more secondary platform users can be classed as detractors, or unhappy customers trapped in a bad relationship. This shows that there is considerable potential for new entrants to win market share; their challenge will be to demonstrate they can meet a platform user's needs more effectively than the existing provider.

In conclusion, platforms may be an increasingly important tool for IFAs, but their needs are far from being completely met. Many at platform providers know this, hence the frenetic pace of development and the continuing need for most platforms to address the challenges they face at strategic, tactical and operational levels.

Matthew Craig is a director of CoreData Research