PlatformsOct 9 2015

‘How will consolidation shake out?’: Coredata

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‘How will consolidation shake out?’: Coredata

Advisers face a dilemma deciding which platforms are most likely to survive in the event of much-heralded consolidation in the platform market, according to a Coredata report.

The Coredata Investment Platform Study 2015 looked into the trends in the platform sector, surveying more than 1,000 advisers.

It found increasing adviser loyalty to their main platform as less than one in eight advisers – 11.3 per cent – expected the business placed on their main platform to fall in the next 12 months.

Two years ago this figure stood at 22.3 per cent.

Craig Phillips, head of Coredata Research International, said advisers considered platform and fund manager charges the most important feature of a platform with 31 per cent of them saying so compared to 25 per cent in 2014.

He said: “This is a notable rise and an indication of the price sensitivities of some advisers and the downward price pressures in the market almost three years on from the introduction of RDR, and also the move to clean share classes.

“In a transparent world and in a maturing industry sector price becomes king, as the service becomes a commodity.”

But the report added that platform markets overseas suggest that more consolidation is probable.

The UK has more than 30 platforms, while the US has around 10 platforms to service a 300m population. Australia also has a smaller number of mainstream platform providers.

The report said: “The RDR is supposed to be the latest catalyst for consolidation in the UK although pricing pressures from volatile markets may well supersede this.

“Could the consolidation we are seeing result in the platform market being split into two distinct animals, with one focused on investment and the other on holistic management of a client?

“Or will we simply end up with eight to 10 players who will try to offer the best of both worlds? The trouble asset managers and advisers face is deciding who is best positioned to survive in the long term.”

Adviser view

Phil Perry, a financial adviser with Cheshire-based Ark Financial Planning, said: “We use platforms mainly for the functionality they provide and the ability to hold investments in one place with the ability to switch between fund managers. Overall the ones we use we have been happy with.

“Although some companies have attempted to sell their platforms I am unsure as to whether consolidation of brands will take place.”