Post-RDR warning for 8,000 IFAs that shun platforms
New data reveal number of IFAs doing all of their business through platforms has continued to grow.
A specialist research firm for the IFA sector has sounded a warning to around 8,400 IFA firms that have yet to adopt a platform for the Retail Distribution Review world, who it says could be missing out on key benefits to making the transition to the new regime post-2012.
New analysis of more than 1,000 IFAs from IFA database MyTouchstone, operated by Equifax’s Touchstone Financial Analytics, confirms that platform use continues to rise within the UK adviser community, but that a large number of firms are still yet to adopt a platform.
Data from the IFA database show that 164 IFAs started to use platforms for the first time in Q2 2012, building on the 188 that started using in Q1 2012.
In total, 488 IFAs placed all their business via platforms in Q2 2012, up from 425 in the first quarter, while 8,400 IFAs placed all their business “off platform” in Q2 2012, down from 8,594 in Q1.
“On” platform new business via IFAs was £3.4bn in Q2, representing 22 per cent of IFA market and down from £3.7bn in Q1, while “off” platform new business via IFAs was £12.4bn in Q2, 78 per cent of IFA market and down from £13.6bn in Q1.
According to MyTouchstone, a percentage of the 8,400 firms that have still yet to adopt a platform may cease to trade when RDR comes into effect, which could explain the lack of willingness to adopt a platform at this stage.
Peter Welch, IFA key account director for MyTouchstone, highlighted that although the number of IFAs placing all new business “off” platform is slowly decreasing, the data shows there is still a significant segment of the market still to adopt a platform partner.
He said: “With RDR fast approaching, we believe that platforms can play a big part in making the transition easier for IFAs.
“The choice of platforms available in the UK market continues to grow, with 30 potential partners available presently. It is no surprise that with everything IFAs have on their plate ahead of RDR, some may not have found the time to perform the necessary due diligence and come to a decision on which platform to partner with.
“This may be exacerbated by the FSA’s view that it is very unlikely that just one platform will be appropriate for all clients needs, meaning IFA firms have to carry out significant platform due diligence on a multitude of firms.”
The data is provided in partnership with ThePlatforum.