Wraps well placed to hoover up assets after re-reg clean up

Often it was accompanied by a big marketing spend and, it must be said, some ‘exciting’ special offers on commission. The commission would usually bring in more business, though the insurers concerned didn’t exactly corner the market.

Sprightly and smaller players may well meet the RDR challenge more easily - those without a big legacy business have fewer obstacles John Lappin

But while pecking orders and top 10s used to be of some importance, shifts in the wrap and platform market are arguably much more noteworthy because partnering with a platform or moving away from one is a much more significant and long-term decision for an investment advice firm and its clients.

Therefore some of the latest research on platform market share from the Platforum makes for fascinating reading. The shift in market share is from the larger players to a group of smaller ones. Where a big five once held 90 per cent of the market, they now have 70 per cent.

We can draw a few broad, albeit tentative, conclusions. The more sprightly and smaller players may well meet the RDR challenge more easily. Obviously those without a big old-style legacy business have fewer obstacles to changing their models. But it also suggests that the investment market will continue to defy easy expectations. Most would see consolidation as the inevitable endgame. But will something in the psychology of advisers confound these expectations?

At least a substantial minority of advisers may have decided that, as they fully embrace the new model, they want a wrap that has already done so as well.

It could be that the slightly smaller players at least offer the capacity for them to be entirely independent with the full range of investment products and solutions. Maybe that project to include investment trusts should be moved back up the list of priorities for the big three.

This is also a trend that is developing before we have complete re-registration freedom. Arguments are still continuing over who pays for what. But once ‘re-reg’ is fully functional, then wraps will be operating in something very close to a free market.

Advisers would be wise to keep one eye on whether any platform they are using suffers precipitous falls in assets. But more generally, would it be wise to bet against this involving lots of mid-sized platform players in the advised sector at least?

That probably isn’t a bad development at all when it comes to consumer choice.

John Lappin blogs about industry issues at www.themoneydebate.co.uk